- Producers keep run rates high amid steady demand
- Weakening prices may prompt production cuts in Sep
Mysteel Global: China’s total ferro silicon output picked up further in August to a five-month high of 493,300 tonnes (t), jumping by 46,610 t or 10.4% from the previous month, according to Mysteel’s monthly survey among the 136 Chinese smelters under its regular tracking.
The sampled smelters host 90% of China’s ferro silicon smelting capacity. On a d-o-d basis, ferro silicon output among the sampled smelters averaged 15,913 t/day, higher by 1,503 t/day m-o-m, the findings showed.
Output in all the major producing areas increased by varying degrees in August, as domestic smelters kept their run rates high to fulfil orders received earlier, Mysteel Global learnt.
In parallel, demand from users remained stable, leading to a decline in ferro silicon inventories and giving domestic smelters reason to keep their production high.
By the end of August, ferro silicon stocks held by the 60 independent ferro silicon smelters under Mysteel’s tracking totalled 62,910 t, lower by 2,680 t m-o-m. These smelters represent about 80% of China’s total ferro silicon smelting capacity.
However, domestic ferro silicon prices lost ground in August as market sentiment cooled slightly, and the derivative market retreated. As of 29 August, the last working day of the month, prices of 75% ferro silicon under Mysteel’s assessment reached RMB 5,431/t ($763/t), including 13% VAT, slipping by RMB 275/t ($39/t) from one month before.
As for the derivative market, the most-traded ferro silicon contract on the Zhengzhou Commodity Exchange for delivery in November closed the daytime trading session at RMB 5,566/t ($782/t) on 29 August, sliding by RMB 384/t ($54/t) from the contract’s settlement price on 31 July, according to the exchange’s data.
Most domestic smelters in China began losing money from late August due to the fall in ferro silicon prices and their elevated production costs caused by the increase in semi-coke prices and the higher electricity charges, Mysteel Global noted.
On 29 August, Mysteel assessed prices of small granularity semi-coke in Northwest China’s Shaanxi at RMB 650/t ($91/t), including 13% VAT, increasing by RMB 100/t ($14/t) from the end of July.
For this month, production of the ferro alloy is likely to dip from August as some smelters may cut their ferro silicon output if prices weaken further, sources said.
However, the decrease in ferro silicon output is expected to be limited. Local smelters in Northwest China’s Ningxia and Qinghai are seen keeping their operation ratios high, even though their smelting costs will remain challenging given their high electricity fees, according to a market watcher in Shanghai.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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