GLOBAL FERRO-SILICON WRAP: European prices hit six-year peak on tight supply

The European spot ferro-silicon market hit its highest point in six years during trading over the week ended Friday March 31 on tight supply against steady demand from steel mills and foundries.

European spot ferro-silicon spot prices were in an unusually wide range of €1,180-1,350 ($1,257-1,439) per tonne as volatility increased in line with business. Spot prices were at €1,310-1,450 per tonne in May 2011, a year when the market peaked at €1,450-1,510 per tonne in January, according to Metal Bulletin historical price data. 

Steel mills tend to use ferro-silicon and ferro-manganese together for their silicon and manganese needs in flat steel production, which typically is used in car manufacture. When ferro-silicon is used in wire rod production it is mostly for tyre cord production, using more speciality grades of the alloy.

“Ferro-silicon is extremely tight in Europe; there’s not much being produced in Europe right now,” a producer source told Metal Bulletin.

“The market has been gaining momentum as there’s been some strength in steel prices,” the producer added.

Still, one European-based steelmaker who bought a shipment of ferro-silicon recently below the new European spot price range, said his company would not be looking to build stock levels.

“We don’t want to book higher,” he said. “We are cautious. We think [ferro-silicon] production has been strong from the last few months. Consumers are sitting on inventory.”

Spot deals were reported at around €1,175-1,200 per tonne, while assessments, based on strength in quarterly numbers, also increased. One industry source reported a couple of 200-tonne lots of standard grade ferro-silicon sold to major German steelmaker ThyssenKrupp for €1,280 per tonne delivered for April shipment, after the company issued a tender in March. Officials at ThyssenKrupp could not be reached for comment, although it typically does not release details about such business.

One European ferro-silicon producer was said to be oversold for second-quarter 2017 business, while operating at reduced production capacity, which is expected to limit European supply in coming months. One European producer deal was reported at €1,375 per tonne for 500 tonnes of ferro-silicon delivered April.

Indian exporters are offering ferro-silicon to Europe at around €1,200 per tonne cif ($1,150-1,180 per tonne cif plus freight and handling costs), and have been successful in getting business done, while exporters in Bhutan are offering alloy at similar price levels. However, Indian ferro-silicon is only 60% silicon content as the country does not produce the standard 65% silicon grade ferro-silicon as typically traded in Europe.

There were virtually no imports of ferro-silicon from Brazil, where domestic producer Ferbasa is opting to sell power back to the national grid because it is more profitable than producing and selling alloy. There are negligible levels of imports from Venezuela, Russia and China, industry sources said.

Three years ago the European Commission opted to maintain anti-dumping duties on imports of ferro-silicon into the EU from China and Russia after a market review. The duties, which were due to expire on March 1, 2013, ranged from 15.6-31.2% on imports from China and 17.8-22.7% on imports from Russia.

China is the biggest ferro-silicon producer in the world, and was running around half of its estimated annual capacity of 10-11 million tonnes. Russia is the second-biggest ferro-silicon producer in the world, running about two-thirds of its estimated annual production capacity of 900,000 tonnes, according to the EC.

Spain-based Ferroglobe and Norway-based Elkem are the biggest ferro-silicon producers in Europe, with smaller levels of production from Finnfjord (Norway), Jugohrom (Macedonia), OFZ Slovakia, and Vargon Alloys in Sweden.

China bides time ahead of April tenders
The ferro-silicon spot market in China is relatively stable as most dealers are sidelined, opting to wait for monthly delivery orders from domestic steelmakers for shipment through April. Metal Bulletin’s assessment for the Chinese market was at 5,700-6,000 yuan ($827-871) per tonne on Friday March 31, from 5,700-5,900 yuan per tonne the week before. 

“Major smelters are standing firm on their offers and are waiting for major steel mills to start buying ferro-silicon for April,” a smelter source in China said, adding that steel mills may set their purchase price at about 6,000-6,100 yuan per tonne for April orders.

Last month, Hebei Steel’s ferro-silicon tender price was at 5,180 yuan per tonne for deliveries in March. It suspended purchases in February after its January order price was settled at 5,700 yuan per tonne. Given relatively high domestic prices, Chinese exporters have further raised their offer prices, but no major deals have been done so far.

US market stable, eyes gains in Q2 
The US ferro-silicon market held steadily at 76-80 cents per lb on Thursday March 30, according to Metal Bulletin sister publication AMM’s latest assessment. The market has seen increased levels of trading activity in recent weeks as dealers worked on trading settlements for second-quarter deliveries. Offering prices have been more competitive in that time despite signs of increasing prices overseas.

“I am surprised people are running the market down like this,” a supplier source said to AMM. “When you know prices are increasing outside of the States it doesn’t make sense given what replacement costs are.”

Another supplier backed that view, saying elevated replacement costs should support US domestic prices. “We are hearing some cheaper numbers, but with replacement numbers where they are, it doesn’t really make sense,” he said.

Still, while overseas market prices are increasing, US dealers said fewer import sources should limit domestic supplies. “Brazilian material isn’t really a factor right now and there is nothing coming from Venezuela, so that is a lot of tonnage to replace,” a third supplier told AMM. “There is more material coming from Malaysia, but I don’t see any way that will make up for the tonnage we need.”

US dealers said stronger domestic demand and tight supplies should combine to push up prices in the near term. “Fundamentals point to stable, or perhaps even higher pricing, as we move forward,” the second supplier source said. “But we’ll have to wait and see what demand is like in the second quarter.”

Metal Bulletin ferro-silicon, silicon prices

Rena Gu

rena.gu@metalbulletinasia.com

Chris Kavanagh

christopher.kavanagh@amm.com

Declan Conway

declan.conway@metalbulletin.com

Published

Rena Gu

Chris Kavanagh

Declan Conway

April 03, 2017

15:28 GMT

Singapore, New York