According to data published in China, ferro silicon production is recorded at 4.43 MnT in CY17, up by around 4% on Y-o-Y basis. In CY16, production volume was recorded at 4.26 MnT.
China, being the largest producer of ferro silicon, contributes more than 60% to the global production while consumes almost a similar percentage. However, China being also the largest steel producer in the world has more demand than it supplies.
Ferro Silicon making is power intensive and hence inner Mongolia is considered as the hub for the commodity’s production, due to the low power tariff in the region.
However, in later months of CY17, the production volume in the Chinese Ferro Silicon producing provinces came down drastically, as their government ordered the producers to shut down production over environmental concerns.
Though steel production was also halted but demand for the commodity exceeded its supply, creating an upsurge in its offers, while speculations also played a significant role.
The winter in China witnessed a huge spike in Ferro Silicon offers, reaching highs of USD 2300/MT, wherein Chinese producers ran out of inventory. Compounding to the same, Russia also stopped exporting as they faced production as well as logistical issue, creating a worldwide global shortage.
However, from Jan’18, the local government of Ningxia province in China allowed production, but at 50% of its capacity, and thereafter prices have started cooling down to normal. However, China still witnesses power cut issue in Ferro Silicon producing province to limit the production.
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