ASIAN FERRO-ALLOYS CONF: Ferro-silicon prices to stabilize in second-half 2018

“There has been stable demand from countries such as Japan and South Korea, importing more ferro-silicon in 2017 compared to 2016, and this will likely continue in 2018,” Wang said on the sidelines of a ferro-silicon roundtable during the 19th Asian Ferro-Alloys Conference held in Hong Kong on March 22.

The reduction in the export tariff from 25% to 20% in 2017 also helped to boost Chinese exports, Wang added.

China exported about 374,000 tonnes of ferro-silicon (>55% Si) in 2017, a 93.67% spike from 2016, according to data from Chinese customs.

Meanwhile, Japan’s imports surged 94.36% year on year from 67,000 tonnes in 2016 to 130,000 tonnes, while South Korea’s imports grew 33.09% from 560,000 tonnes in 2016 to 750,000 tonnes in 2017.

A manganese alloy producer agreed that the ferro-silicon market would start to correct itself soon because prices are “falling too fast”.

“Ferro-silicon prices in China are subdued, causing many mills to lose money. If this continues, for example if the price drops below 6,000 yuan ($956.05) per tonne for 72 grade, many will consider shutting down or shifting to other ferro-alloys such as silico-manganese or silicon carbide,” he said.

Metal Bulletin assessed the ferro-silicon Chinese free market, min 75% Si, in-warehouse price at 6,500-7,000 yuan on March 23, a decline from the 6,800-7,300 yuan range assessed the week before.

In 2016, China had a total ferro-silicon capacity of 7.8 million tonnes and produced about 4.25 million tonnes, according to Wang.

While 2017 production figures are not clear yet, Wang attributed the falling prices to a surplus of supply in the beginning of 2018.

Ferro-silicon plants had increased production in response to high prices in December 2017, when prices spiked to as high as 12,000 yuan per tonne.

This rise in supply has not slowed since then, which has suppressed prices from January until now, Wang said.

“Some ferro-silicon plants are not making money because prices have lowered to reach the cost price, so prices can’t go down further and the market will correct itself then,” Wang said.

Moreover, Wang cited the healthy growth of the Chinese magnesium market, which uses ferro-silicon as a reducing agent during production, as another factor that will underpin ferro-silicon prices.

“This year, magnesium production should be more than 300,000 tonnes, which will support the ferro-silicon price,” Wang said.