India: Ferro silicon prices plunge on weak demand

Indian ferro silicon prices appeared to be heading down since the end of Oct’21 on cues from China where prices started falling. And now low demand is also impacting prices in India.

According to SteelMint’s assessment on 18 Nov’21, ferro silicon prices for HC 70% are at INR 177,500/t exw-Guwahati, a significant fall by INR 73,100/t w-o-w. Meanwhile, Bhutan’s offers decreased by INR 65,000/t to INR 195,000/t exw w-o-w on the same date.

 Why are ferro silicon prices declining?

Weak demand
Indian buyers (mainly end-users) are booking material as per need in a bearish market. Meanwhile, traders are showing lesser interest in advance bookings due to the continuously falling prices. Muted demand is affecting prices.

Meanwhile, owing to slow buying, a limited number of deals has been recorded by SteelMint this week. However, some producers are out of stock.

Oversupply of material
Ferro silicon plants are running to full capacity. Buyers were refraining from booking large quantities due to surging prices of ferro silicon till the end of October. As a result, this intensified the oversupply in the market. In addition, some producers started selling at lower than the prevailing prices to clear their old inventories.

However, smelters are still holding good profit margins despite the reduction in ferro silicon prices.

Reducing Chinese prices
Ferro silicon (HC75%) prices in the largest  producing country, China   decreased by around RMB 450-1,000/t ($70-157/t) to RMB 9,250-9,750/t ($1,448-1,526/t) across provinces on 18 Nov’21. This was mainly due to the improvement in production after strict environmental curbs were put in place that led to correction in semi carbon prices.

Suppressed demand from Chinese steel mills is also a reason behind the reduced Chinese prices, encouraging.  Indian buyers to force a reduction in prices.

Outlook
Market participants expect prices to fall further by up to INR 150,000/t exw in the upcoming week. The prevailing muted demand and sales pressure on producers may result in further price drops.