It said this was a result of increased electricity prices and redundant costs arising from a change in mix due to availability.
The group said the decreased production equalled an 88percent installed capacity utilisation.
It said its revenue rose to R2.72billion, up from R2.58bn, while earnings before interest, taxation, depreciation and amortisation decreased to R796.3million, down from R865.4m as compared to last year.
Merafe said its profit also dropped 12.62percent to R425.1m, down from R486.5m, while headline earnings per share declined to 16.9cents a share, down from 19.4c.
The board declared a gross interim dividend of 7.97c a share and the dividend will be paid out of income reserves.
Merafe Resources is the empowerment partner in a joint-venture with Glencore on its South African chrome business, with a 20.5percent stake.
It said that the electricity hikes, which came into effect in April, pushed production costs up by nearly 5percent compared to last year.
The group said the global production for stainless steel market - a key consumer of ferrochrome - increased by 10percent, driven mainly by a 13percent growth in Indonesian stainless steel output.
“Growth in ferrochrome supply has not matched the rise in demand so far this year, with global ferrochrome production rising by 8percent, period on period,” Merafe said.
Merafe said that ferrochrome revenue increased by 2.6percent to R2.34bn, up from R2.28bn due to higher sales volumes, but partly offset by the stronger average rand/dollar exchange rate of R12.31.
Chrome ore revenue increased by 27.1percent to R378.5m, from R297.8m.
Going forward, the group said that 2018 stainless steel production was forecast to be 50.8million tons, according to the CRU Group estimate, and this represents an increase of 4.9percent as compared to 2017.
Merafe rose 8.39percent on the JSE yesterday to close at R1.68.