In the second half of 1998 and in the first quarter of 1999, world high carbon ferro chrome prices fell by 10 cents, taking them to a bench mark level of 37 cents per lb for Jan/March 1999. These prices were the lowest since Jan/March 1983 quarter when they had reached 33-34 cents per lb. These low level prices now reached have made it unprofitable for most ferro chrome producers to produce the item for export and even some of the South African producers are cutting down their production.

The year 1998 was the worst for stainless steel in Japan when production fell by around 16 percent, the largest reduction in history. Stainless steel production the U.S. fell by five per cent from 1997. This had the effect on ferro chrome prices as the stainless steel producers hammered down the raw material prices.

To some extent at the end of 1997 the troubles in Kazchrome and fall in productionthere helped world prices of ferro chrome. This was reflected in fall in production in first half of 1998 in Kazak and for the year as a whole about 150,000 tonnes of high carbon ferro chrome production was lost but due to bad conditions in stainless steel, price hike in ferro chrome was not possible.

The year 1998 also saw concentration of ferro chrome production in two large producers. Sudelektra Holdings of Switzerland and Glencore International took over Consolidated Metallurgical Industries Ltd of South Africa. This has led to formation of world's two largest ferro chrome producers controlling over 53 per cent of the world demand. Samancor has a capacity of 1.2 million tonnes of charge chrome/ ferro chrome while Glencore group will have a capacity of 1.1 million tonnes.

Production of high carbon ferro chrome/ charge chrome has been increasing in South Africa rising from about 1.5 million in 1996 to 1.9 million tonnes in 1997 and crossing 2 million tonnes in 1998. More production capacity is beingadded and capacity built up will reach 2.6 million tonnes in 1999. This increase in capacity will add to the pressure on rpcies which are already too low.

In 1997 world produced about 4 million tonnes of ferro chrome and in 1998 also production has remained almost the same but South Africa produces 50 per cent of the total production. Kozokotan, India, Turkey and Finland are some of the other producers who have some resources of chrome ore but it is South Africa alone which determines the level of world prices. Therefore the fate of the other world producers will be determined by the South Africans.

Chrome Ore in 1998. The poor conditions in ferro chrome market are also reflected in the chrome ore market during 1998. Imports of chrome ore by major consumers like Japan and China fell sharply reducing world demand as also prices.

Japan imported about 400,000 tonnes of chrome ore in 1998, the lowest tonnage in 30 years. China imported about 700,000 tonnes a fall of over 22 per cent over 1997 and almosthalf of what it imported in 1995 at 1.4 million tonnes. The lower imports was because of fall in production of ferro chrome and 1999 is not likely to be any better than 1998.

Production of chrome ore in 1997 is said to be 14 million tonnes a steep increase over 11 million tonnes of 1996. Production in 1998 is said to be equal to that of 1997. South African production is estimated at 6.7 million tonnes. But production in other countries like India has been adversely affected. Prices of chrome ore also fell in the world market and India being the largest exporter to China it's exports were adversely affected.

Indian ore prices fell by as much as $ 3- tp $ 40 per tonne and prices came to about $ 100 per tonne CIF but demand was slack even at these low prices. There is little hope of an increase during the year 1999.