The gradual rise in Chinese ferrosilicon prices that began earlier this month driven the persistent decline in supply amid the further recovery in demand, has seen the price index of 75% grade Ferro Silicon grow to a two-month high, Mysteel’s data shows. As of May 28, the price was at Yuan 5,434/MT (USD 760/MT) including the 13% VAT, some Yuan 137/MT higher from one month earlier.
Many domestic Ferro Silicon smelters reduced their output over the past two or three months given the softening prices, resulting in a substantial decline in the supply of this ferroalloy in the domestic market, Mysteel Global notes.
For example, last month China’s Ferro Silicon output fell by 29,300 MT or 7% from that for March to hit a 27-month low of 392,400 MT or slumping by 18% from one year earlier, according to Mysteel’s survey among the country’s 128 major smelters which host almost all of China’s Ferro Silicon capacity.
In parallel, Ferro Silicon stocks at domestic smelters’ yards have been declining rapidly since last month. Mysteel’s latest survey showed that stocks at the yards of the 60 independent Ferro Silicon smelters Mysteel tracks had thinned from the near 400,000 tonnes in late March to reach 97,600 MT as of May 22. Capacity of the 60 smelters in the sample covers 63.5% of the country’s total.
“The Ferro Silicon stocks (held by smelters) have slipped to a very low level, and those are the standing stocks of major Ferro Silicon smelters,” a market watcher in Shanghai said.
Ferro Silicon consumption among steel producers also increased with the recovery in steel production. In April China’s crude steel output returned to the level prior to the COVID-19 outbreak, with the tonnage growing by 7.7% on month or 0.2% on year to about 85 MnT, according to the country’s National Bureau of Statistics.
In addition to the increase in domestic consumption, China’s Ferro Silicon exports also saw a significant improvement over March-April, Mysteel Global notes. For April, the export volume totalled 43,064 MT, higher by 7.2% on year, according to data from China’s General Administration of Customs.
With the rise in Ferro Silicon prices, bidding prices being tabled by steelmakers for June are expected to increase by Yuan 150-200/MT from bid levels for May, as Ferro Silicon smelters and traders will be loathed to accept low procurement prices from buyers, Mysteel Global notes.
However, China’s Ferro Silicon market is still under some pressure given the uptick in output this month. “Some smelters in the Ningxia Hui Autonomous Region have accelerated their pace of smelting, which may exert pressure on further rises in prices,” the Shanghai-based market source commented.
(This article has been published under the article exchange agreement between SteelMint Research and Mysteel Global.)
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