Demand for ferro silicon from various regions in India has increased over the 2-3 weeks, with producers receiving a steady spate of inquiries. With availability limited, sellers have continuously raised their offers.
SteelMint’s assessment for HC 70%from Bhutan is at around INR 134,000/t, which is a multi-year high price.
Availability is tight with most of India’s and Bhutan’sproducers booked till next month. They only have very limited volumes to offer in the spot market. Domestic prices have taken a huge leap of INR 10,000/t m-o-m to touch INR 140,000/t ex-Guwahati as the race for booking materials gains momentum.
Market participants expect the prices to rise further on tight supply and the buyers are willing to secure more materials seeing the uncertainty in procuring the same. The labour shortage in Bhutan is aggravating the issues of limited dispatches.
Meanwhile, suspended production from major smelters in Malaysia and the rising cost of Chinese exports have further boosted the market for ferro silicon in India.
Chinese prices of ferro silicon increased due to higher power tariffs and production curbs in Ningxia, which is the bulk producing region for the country. The local government in Ningxia asked the smelters to cut down production by 30% this month and by another 30% till the year-end. Ningxia caters to around 27% of the total production of ferro silicon in China and the recent curbs might take around 30-kilo tonne (kt) out of the market.
In addition, the number of inquiries in China has spiked, due to suspension of operations at Malaysian plants due to Covid cases. This has further shored up sentiments, creating a case for further hikes in prices. The current FoB prices from China are at around $1,820/t for 75% grade ferro silicon.
The situation is similar in India with an increased number of export inquiries. But the smelters are unable to cater to these due to supply shortage and sizing issues because of labour unavailability.
However, the supply shrinkage is taking a toll on domestic dispatches as well. A trader told SteelMint that, even after paying a hefty amount of INR 135,000/t, they are not assured of ready dispatches. The number of trucks is limited and it takes at least 10-15 days for any dispatches.
Bhutan is still struggling to deliver the previously booked dispatches and most of the plants are refraining from taking new orders.
In Guwahati, the situation seems similar as the production volume is limited while the inquiries have increased two-fold, due to lower imports from Bhutan and third-party countries.
Outlook
Domestic demand is expected to hold steady and rise by next week as steelmakers and traders contest to book and receive the material.
Some producers also suggest that current prices might increase to record highs, and this is the first time when, even at higher prices and premiums, buyers are unable to get the material at the desired time.
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