RESEARCH: Key takeaways from the latest Ferro-alloys Market Tracker

This month’s key ferro-alloy forecast highlights:

• Prices across most ferro-alloy markets trended stable to lower in August as demand remained subdued in major markets, apart from China where steel output continues to rise at a rapid pace, supporting demand for ferro-alloys. As alloy makers seek to remedy supply/demand imbalances while economic recovery remains fragile in most areas – with slow and uneven recovery evident in steel consumption and, in turn, steel production and alloy consumption – we have seen further production cutbacks over the past month in the ferro-silicon, silicon metal and manganese alloy markets.
• Unplanned outages at Chinese molybdenum producers supported molybdenum prices over the past month, but the return to normal operations by JDC Moly has already prompted molybdic oxide prices to retreat and will pressure ferro-molybdenum prices lower in the near term.
• US silicon metal producers are enjoying modest price improvement on the back of a successful first stage of their anti-dumping trade case filing against several countries. The targeted countries accounted for 27% of US silicon metal imports thus far this year. Regardless of the outcome of the anti-dumping investigation, the psychological impact on the market will be sufficient to support US silicon metal prices in the coming weeks.
• Demand in China continues to far outpace demand in other global markets, with Chinese steel production gaining 9.1% year on year in July and boosting year-to-date output growth to 2.8% versus the year-ago level. In contrast, crude steel output in the rest of the world fell by 17% year on year in July, and slowed by 15% versus January-July 2019. Much of the growth in Chinese steel production continues to be attributed to growth in rebar output, maintaining support for both vanadium and manganese consumption.
• Stainless steel output has been struggling relative to total steel production. The post-summer period is often seasonally slower with regard to stainless steel production in China, and although there is uncertainty as to whether certain seasonal trends will hold this year given the effects of the Covid-19 pandemic, end users of stainless steel dependent on consumer spending continue to suffer, even in China. Consumer confidence in China is at a three-year low. With demand from stainless mills continuing to disappoint, and the competitiveness of import offers in China, we expect further easing in Chinese chrome prices in the coming weeks.

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