GLOBAL FERRO-SILICON WRAP: Chinese producers bet on higher consumer interest; European prices look vulnerable close to seasonal shutdowns

The onset of the seasonal slowdown, already under way in Europe where steelmakers in Germany are shutting before July, is seeing a mixed reaction across international ferro-silicon markets.

Chinese ferro-silicon suppliers are expecting a bounce in demand from their domestic customers in the steel sector and are reacting accordingly with higher offer prices. In the USA, ferro-silicon suppliers say limited availability is stemming further price losses, while European sources reckon price movement bias looks likely to the downside through traditional domestic summer shutdowns.

• Chinese suppliers await renewed demand from steelmakers
• US market price dips, but support seen
• European slowdown may lead to price cuts

Chinese producers lift offer prices again
The Chinese ferro-silicon spot market has increased in the past week, extending a move from the week before, as producers upped their offer prices again. Producers are hoping that their customers in the steel sector will accept the apparently strengthening trend in the market in the near term. 

Metal Bulletin’s ferro-silicon price in China’s spot price was at 5,600-5,700 yuan ($819-834) per tonne on Friday June 23, up 50 yuan week-on-week. The Chinese export price edged up $20 at the top end to $1,120-1,170 per tonne basis fob.

“Mills will start to make purchases for July in the coming week so ferro-silicon smelters have been active in increasing their offer prices, particularly as market fundamentals are not bad,” one trader said.

A smelter source said: “Overall market availability is not sufficient [to meet demand], plus current [steel] mills’ profit is comfortable so they [ferro-silicon producers] won’t push too much on ferro-silicon prices.”

Steelmakers’ July tender prices for ferro-silicon may increase from June’s level, the smelter source added.

US market drops on supplier offers
The US ferro-silicon market has edged down in the past week as traders and other suppliers have been more active in trying to get deals done before the traditionally slower seasonal third quarter. 

US spot prices for ferro-silicon slipped a cent to 80-84 cents per lb on Thursday, according to Metal Bulletin sister publication AMM’s latest assessment.

“I think we have a situation where traders are possibly [prepared in] slimming [their profit] margins, and panicking a little bit thinking they can’t capitalise on [higher prices] as [they] might have thought with selling opportunities thinning out as the summer approaches,” a supplier source told AMM.

Despite weaker prices, market participants said the US market is being supported on relatively tight supply and replacement costs.

“The market thought prices were firm because supply was thinning out and that material coming over [imports] were at stronger prices,” a second supplier source said. “That is still true today.”

Still, industry sources said market weakness may be short-lived.

“Quite frankly, I see no reason to panic, or sell off or anything like that,” the second supplier source said. “With replacement costs as they are, we still see the market as in a strong position.”

European market stabilises but vulnerable
The European ferro-silicon market been steady in the past week, stabilising after a drop the week before, although the move into the seasonal slowdown months of July and August is expected to prompt lower offer prices. 

Metal Bulletin’s price quotation for ferro-silicon delivered in Europe was €1,220-1,270 ($1,365-1,421) per tonne on Friday.

“Ferro-silicon is already being offered below €1,220 per tonne from a couple of traders coming into the seasonal slowdown as they want to clear their order books,” one producer source in Europe told Metal Bulletin, adding that he expected that sort of trading activity to increase in coming weeks.

Steelmakers in Europe will be starting their seasonal shutdowns for maintenance and repair programmes in July and August, with steelmakers reporting around a three-week shutdown of furnaces and/or plants this year. Steelmakers tend to conduct maintenance in the months when their workers go on holiday, and sometimes extend or cut that shutdown depending on market conditions.

Alloy from exporters to Europe has been available for sale around the lower end of the current European spot price range. Much of that alloy is being touted from Asia, as OM Holdings has increased its production in Malaysia this year. 

Domestic European suppliers are holding their offer prices towards the top end of the spot price trading range in Europe because of low stock levels, with some steelmakers supplementing their long-term contracted intake with low tonnage deals from the spot market.

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