Questor share tip: Hold International Ferro Metals ferrochrome prices are rising again

By Questor Published: 7:00AM GMT twenty-four February 2010

International Ferro Metals

International Ferro Metals

33p -2p

ENRC and International Ferro Metals to cut prolongation Ferrochrome cost decrease hits IFM Chinas growth drives nine-fold climb in IFM income Questor: Hochschild will gleam from china bearing Shares in Eurasian Natural Resources Corp arent poor but suggest worth for the upswing

Questor says HOLD

The proof at the back of the primary tip was that ferrochrome prices, set on a quarterly basement in talks in between producers and customers, appeared to be at a bottom, but they fell further.

Questor deemed in Dec that the shares, with infancy of the bad headlines labelled in, were worth holding on to, and yesterday, as the association voiced halt results, the summary from David Kovarsky, arch executive, was that he could see the "light at the finish of the tunnel".

IFM mines ferrochrome in South Africa. Between 80pc to 90pc of ferrochrome is used in the prolongation of immaculate steel, that is used for a far-reaching accumulation of purposes from creation cutlery to constructing construction façades. Stainless steel consists of about 18pc of ferrochrome alloy. IFM is listed in London, nonetheless the operations are located in the North West range of South Africa, where the infancy of tellurian ferrochrome reserve are found, and the head bureau is in Sydney.

IFM"s formula for the half-year to Dec were a pointy alleviation on the inlet of the prior half. Sales volumes increasing 35pc, income rose 77pc to R452m (�37.6m), and the loss prior to taxation narrowed from R429m to R145m.

These total were still significantly reduce than those available in the second 6 months of 2008 when revenues were 14pc forward of the ultimate interpretation but the ceiling direction should inspire investors, generally given the difficulties acted by the low ferrochrome prices and a clever rand.

The association appears to have weathered the charge dynamically and used the duration to take a tighter hold on costs. A partnership with Anglo Platinum, voiced last week, will broach 30pc of IFM"s ore mandate at usually the cost of transport, whilst a co-generation plant, due to launch after this year, will concede the association to beget 10pc of the physical phenomenon order a vital cost by harnessing gases that of course start during processing.

The key, though, is that Mr Kovarsky referred to a "significantly improved" ferrochrome marketplace with rising immaculate steel utilization rates in Europe, the US and China. Economic recoveries in those areas should assistance to expostulate up the ferrochrome cost and belatedly broach the worth Questor identified last summer.

"This is the infancy certain I have felt given Oct 2008," the arch senior manager said.

The batch has gained 33pc given the dejection of the Dec analysis, but investors should cling to on for the brighter outlook. Hold.