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Johannesburg - Merafe Resources [JSE:MRF] reported a first-half return to profit on Tuesday and forecast a gradual recovery in ferrochrome demand by the end of 2010.
Merafe, the world's largest ferrochrome producer which operates a joint venture with London-listed Xstrata, said ferrochrome inventory remained low at 10 to 12 weeks due to reduced South African capacity.
The miner said headline earnings per share for the six months to end-June came to 7c in line with its forecast, compared with a loss of 3c a year earlier.
"Continued global economic growth coupled with the lack of any new ferrochrome capacity coming on stream in the immediate future should support a recovery in demand in the final quarter of 2010 and into 2011," the company said in a statement.Revenue increased by 45% to R1.19bn.
Demand for ferrochrome - used in stainless steel to prevent corrosion - slumped during the economic crisis, forcing companies in top producer South Africa to cut output.
Merafe's joint venture with Xstrata has since restarted most of its furnaces, after the market began to turn in the third quarter of last year.
Ferrochrome prices jumped by 35% in the second quarter of this year as demand rebounded.
- Reuters
