The ferro silicon market in China has exhibited a nascent uptrend, marked by price stabilisation and rising demand signals. However, this cautious optimism is tempered by persistent inventory pressures threatening to dampen potential price increases. Prices has shown a slight upward movement this week:
- Grade 75% silicon: Prices edged up by RMB 50/t ($7/t) to settle within a range of RMB 6,710-6,890/t ($927-$952/t) ex-works, including tax.
- Grade 72% silicon: Prices followed a similar trend, rising by RMB 50/t ($7/t) to establish a new range of RMB 6,320-6,510/t ($873-$900/t) ex-works, including tax.
Price stability, market benchmarking: Spot prices for ferro silicon have demonstrated relative stability, bolstered by a recent development with the potential to serve as a market anchor. A prominent steel producer in North China has finalised its definitive ferro silicon bidding price for April. This established benchmark has the potential to further stabilise the market as other steel mills utilise it as a reference point for their own procurement activities.
Positive demand signals foster industry confidence: More active buying environment, potentially driven by a reluctance to purchase at potentially lower future prices, suggested a potential shift towards a market with upward pricing pressures. Also, buying higher price mentality signified a growing sense of confidence among market participants.
Furthermore, rising demand for ferro silicon is leading some companies to report tighter spot supply, prompting them to prioritise production orders in order to meet customer needs. This positive trend has boosted overall industry morale and contributed to the current market stability.
Warehouse stockpiles elevate: Delivery warehouses continued to hold significant ferro silicon inventories following the recent conclusion of major steel mill bidding rounds. This excess inventory has the potential to dampen any near-term price increases, creating a delicate balance within the market.
Outlook
The ferro silicon market is at a crossroads. While positive demand signalled and price stabilisation suggested a potential uptrend, the overhang of existing inventory presented a significant hurdle. Continued monitoring of these key factors will be crucial for accurately assessing the market’s ability to overcome this challenge and transition towards a more sustained upward trajectory.
Note: This article has been written in accordance with an agreement between CBC and BigMint.