How Chrome Concentrate Is Actually Priced

Every chrome concentrate offer leads with a Cr₂O₃ percentage, and every experienced buyer knows that number settles less than half the price. What actually determines what a cargo costs is the schedule of premiums and penalties around the base grade, how often the price is reviewed, how moisture is treated and where the governing assay is taken.

The chrome to iron ratio

Cr₂O₃ content tells a smelter how much chrome is in the feed. The chrome to iron ratio tells it what alloy it can make. A high ratio allows production of higher grade ferrochrome; a low one constrains the smelter to charge chrome regardless of the headline grade.

This is the underlying reason Zimbabwean Great Dyke material commands a premium beyond what the grade difference alone would justify. It runs both a higher Cr₂O₃ and a better chrome to iron ratio than typical Bushveld concentrate. A buyer comparing a 42% South African offer against a 46% Zimbabwean one on grade alone is comparing the wrong number.

Premium schedules beat negotiation

The largest single source of dispute in chrome trading is what happens when the delivered assay comes back different from the contracted base. If the contract is silent, the parties negotiate under pressure with a truck or a vessel already committed, and one of them loses.

The alternative is a schedule written into the contract. A workable structure on a 40 to 42% base sets a fixed premium per tonne for material assaying above 42.00% up to 43.00%, and a higher fixed premium above 43.00%, with the premiums stated as absolute amounts rather than percentages and expressly not cumulative. Determination is on testing at delivery.

Stated that way, an out of specification result produces an arithmetic answer rather than an argument. It also means the seller has a reason to deliver better material, which is worth more over a twenty four month contract than any concession extracted at signature.

Review cycles: why a fixed price is a fiction

Chrome contracts are frequently written for twenty four months. Nobody should believe a fixed price over that horizon, and writing one in guarantees that the contract will be renegotiated or abandoned when the index moves. We write a review cycle instead, commonly every fourteen days on a high frequency chain, referenced to the prevailing index.

The review mechanism should say what index, on what date, and what happens if the parties disagree. A review clause that requires mutual agreement to change the price is not a review clause, it is an option for whichever party the market has favoured.

Moisture and what you are actually paying for

Chrome concentrate is sold with moisture in it, typically in the range of six to nine percent as loaded. Whether the price is quoted on a dry metric tonne basis or a wet basis makes a material difference to the settled amount, and the two are not always distinguished clearly in offers passed down a broker chain.

State it explicitly. If the price is per dry metric tonne, the moisture determination method and the deduction basis should be in the contract. If it is wet, the maximum moisture should be capped with a penalty above it, otherwise the buyer is paying chrome prices for water.

Where the assay is taken

On inland delivered business, typically DAP a point such as City Deep in Johannesburg, or FOT at the wash plant, the assay is usually taken at delivery and that result governs. On export cargoes it is common to assay at loading and again on discharge, with a tolerance between them and a mechanism for a third umpire assay if they diverge.

Whichever applies, name the inspection body. SGS and Intertek are the two most commonly accepted in this market. An offer that says certified without naming who certifies is not saying anything.

Ramp and volume commitments

A sensible chrome supply agreement does not start at full volume. The pattern that works is a trial parcel of around 500 MT to prove the grade and the logistics, then a ramp, commonly a thousand tonnes in the first week and two and a half thousand tonnes a week from the second, scaling toward a monthly target by agreement rather than by contractual obligation.

That structure protects both sides. The buyer is not committed to volume from a supplier who has not yet performed, and the seller is not exposed to a penalty for failing to hit a tonnage it was never realistically going to reach in month one.

The commission line

Where a broker sits in a chrome chain, the commission should be a stated line next to the price or commission clause, expressed as a fixed amount per tonne and identifying who pays it. Conditional top ups and sliding arrangements create ambiguity that surfaces exactly when the money is due. A hard flat rate per tonne, paid by a named party, is cleaner for everyone including the broker.