China shuns chrome exports tax ke

China, the world's biggest producer of ferroalloys, is turning to South Africa and Turkey for chrome ore after India imposed a tax on the mineral to curb shipments.

Chinese steelmakers and traders are increasing purchases of chromium ore from South Africa and Turkey after costs from India increased, said Tu Kun, ferroalloy general manager of China Minmetals Corp, the nation's biggest importer of chrome ore, in Hong Kong today.

India, which supplies one third of China's imports of chrome ores, imposed a tax on the mineral's overseas shipment from March 1. Higher duties raised costs for Chinese buyers, as the nation's economic growth of 10.7 per cent last year boosted demand for metals including stainless steel.

"Chrome ore demand is strong because of increased production capacity of stainless steel in China,'' Tu said at a conference. China may boost stainless steel output by 37 per cent to 7.35 million tonne this year from 5.36 million tonne in 2006, metal research firm Heinz H Pariser said last week.

Ferrochrome, a type of ferroalloy combining iron and chrome, can be used in the production of stainless steel as a substitute for nickel.

China's chrome ore imports rose 40 per cent to 4.32 million tonne last year, including 1.34 million tonne, or 31 per cent, from India. About 18 per cent of the imports were from Turkey and 17 per cent from South Africa last year, according to customs data.

"Chromium prices will remain high in the second quarter this year," as Chinese demand keeps rising and exporters of the mineral may implement more restrictive measures to curb shipments, Tu said.

Prices may be more volatile in the third quarter as Chinese stainless steel producers may cut back production, he said.

Minmetals plans to boost chrome ore imports by 67 per cent to 1 million tonne this year, according to Tu.