UPDATE 1-IFM bullish on ferrochrome demand as Q3 sales jump

LONDON, April 27 (Reuters) - South African-based International Ferro Metals Ltd (IFM) posted a 76 percent rise in third quarter ferrochrome sales, reflecting a rebound after smelters were shut last year during the downturn.

The London-listed firm also was optimistic about rising demand for ferrochrome, a key ingredient in stainless steel.

'The demand for ferrochrome has increased over the quarter with corresponding improvement in stainless steel demand, as is reflected in the current premium in the spot ferrochrome price over the contract price,' it said in a statement on Tuesday.

'IFL expects this trend to continue as demand from the USA and Europe continues to improve.'

The firm sold 64,063 tonnes of ferrochrome in the three months to end March, its fiscal third quarter, compared to 36,383 tonnes in the same period last year.

Sales were higher than production of 54,394 tonnes, up 48 percent, because the firm also sold some inventories.

The ferrochrome sector made sweeping cuts to production when demand tumbled during the global downturn, but much of the capacity has been restarted.

Ferrochrome prices have recovered along with demand, driven by China. The second quarter contract settlement rose 35 percent to $1.36 per lb.

In February, the firm reported a wider loss in its fiscal first half as higher production was outweighed by lower prices for the stainless steel ingredient and stronger rand.

(Reporting by Eric Onstad; Editing by Hans Peters) Keywords: IFM/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]; ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.