India: Ferro silicon prices scale new highs tracking Chinese prices

Domestic ferro silicon prices, which were at around INR 124,000/t exw in the beginning of Sep’21, have reached a new high of INR 218,000/t exw-Guwahati. Prices have shot through the roof, literally, due to supply-demand mismatch, SteelMint notes. Increasing ferro silicon prices in China on severe power crisis in that country seems to be auguring well for ferro silicon producers in India and Bhutan.

SteelMint assessed ferro silicon prices at an all-time high, hovering at around INR 205,000-218,000/t exw for both Guwahati and Bhutan. However, major Bhutanese producers have opened their prices at INR 200,000/t exw, while some producers are offering even higher in anticipation of better profits. However, no deals have been recorded at higher prices.

With an eye on settling prices, steelmakers are actively negotiating with producers and are trying to secure as much material as possible which, in turn, is resulting in strong demand in the spot market, despite historically high prices.

Prices up INR 60k, w-o-w

On the other hand, ferro silicon producers are reluctant to sell large quantities amid prevailing bullish sentiments in the market. Since the commencement of assessment, this has been the first time that SteelMint has observed an increase of INR 60,000/t, w-o-w, in ferro silicon prices.

Some producers have stopped offering in the spot market, which indicates that prices may rise further, while a few other producers are sold out. As a result, material shortage has intensified in the Indian market, which is further strengthening ferro silicon prices.

A major producer told SteelMint that “the ferro silicon market has gone haywire and it is difficult to speculate as to where prices would reach”.

Moreover, smelters have also been influenced by international prices, which remain at an all-time high owing to tight supply. However, the spike in prices of coke has reduced the profit margin of smelters to an extent.

Outlook

Optimism prevails in the market due to supply-demand mismatch. It is expected that sellers would be able to achieve a good bottomline by the end of the fiscal year.