The battle over the possible LME ferrochrome contract appears to be between ENRC and Glencore or high carbon vs. charge chrome. The South African ferrochrome industry has dwindled to two producers, led by Glencore, and as a result, pricing has been regained. “Using the benchmark, the remaining South African producers can make sure that there are no more competitors and they now have the ability to raise prices on their own,” one insider said.
However, the high-carbon ferrochrome producers have always been left out of the benchmark system despite their size (on a contained Cr basis ENRC is almost the size of Glencore). By upsetting the current system, ENRC reportedly thinks it will be on equal basis as Glencore.
The other producers are still undecided. Some worry that they will be at the mercy of the financial companies that dominate the LME; it won’t be a fundamental market but another form of equity market. However, those undecided don’t have any say under the current pricing system, whether it is the benchmark or the indexes.