IFM hit by Rand and low seasonal demand

15th Nov 2010 14:24

International Ferro Metals increased its production of Ferrochrome in the three months to September 2010 but nearly half of it remained in stock at the end of the period. IFM says that the seasonal downturn in demand was more pronounced than in the past. High electricity prices stemmed production but the price remained flat at $1.30/lb, although the strength of the South African Rand does hit the company. The FerroChrome stock increased from 17,976 tonnes to 42,870 tonnes as sales in the quarter almost halved from 55,433 tonnes to 28,891 tonnes. Production edged up from 51,331 tonnes to 53,785 tonnes and it was well above the 36,773 tonnes produced in the same period last year. This meant that IFM went from a net cash position to net debt of ZAR309m at the end of September 2010. Growth in stainless steel production is expected to increase demand for FerroChrome. IFM is developing a chrome tailings retreatment plant with a subsidiary of AIM-quoted and JSE-listed Pan African Resources. IFM will receive ZAR80m in exchanged for its 25% net profit interest in the tailings.