China ferro-alloys sectors show muted response to 2024 economy targets

The ferro-alloys sector in China has shown a muted response to the country’s economic targets set for 2024 and laid out in the government work report released by Premier Minister Qiang Li on Tuesday March 5 in Beijing, industry sources have told Fastmarkets

The main 2024 economy targets were set out in the Two Sessions conference this week. The Two Sessions are the annual meetings of China’s National People’s Congress (NCP) and the Chinese People’s Political Consultative Conference (CPPCC). These are separate events held at the same time and ran March 4-10 this year.

The goals relevant to the ferro-alloys markets included the following:

  • Yearly growth rate at 5% in 2024 in gross domestic product (GDP)
  • Issuance of 3.9 trillion yuan ($541 billion) in local government special bonds, plus 1 trillion yuan in extra-long-term special treasury bonds
  • Promotion of the construction and supply of affordable housing and the renovation of old residential areas
  • Development and utilization of new energy storage technology
  • Increasing the use of green electricity, although coal and coal-fired power will retain an important position to ensure energy security

“It seems that the downstream steel sector was not boosted by the 2024 economic targets announced in the Two Sessions on March 5. Rebar spot prices dropped that day,” a China-based source in the steel rebar sector said.

Fastmarkets’ daily price assessment for steel reinforcing bar (rebar), domestic, ex-whs Eastern China, was 3,630-3,650 yuan ($504-507) per tonne on March 5, down by 10 yuan per tonne from 3,640-3,660 yuan per tonne the day before. On March 8, the assessment was 3,580-3,600 yuan per tonne.

Chinese ferro-silicon prices seemed to be unaffected and stayed on their former downtrend because of poor downstream steel demand, market sources said.

Fastmarkets’ price assessment for ferro-silicon, 75% Si min, in-whs China, was 6,700-6,900 yuan per tonne on March 6, down by 100 yuan per tonne from 6,800-7,000 yuan per tonne a week earlier.

“To my knowledge, most China ferro-silicon market participants were still making hand-to-mouth purchases and keeping a careful watch on the market,” a China-based ferro-silicon source said.

“Because it is an upstream steel production raw material, ferro-silicon prices will not become stronger if downstream rebar prices dip, because many steel market participants think that the 2024 economy targets did not meet their expectations,” the same source added.

A second China-based ferro-silicon source said: “So far, I do not see any boost to the ferro-silicon market. The downstream steel demand for ferro-silicon was still quite weak. I heard the operating rate among steel mills in China was around 70%.”

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Tungsten and vanadium prices rise

Tungsten prices in China rose amid tight spot availability and higher long-term contract offers from major domestic tungsten producers, but downstream buyers seemed to find it difficult to accept such high offers, market sources said.

Fastmarkets’ weekly price assessment for ferro-tungsten, export, min 75%, fob China, was $40-42 per kg W on Wednesday, narrowing upward by $1 per kg W from $39-42 per kg W a week earlier.

The corresponding weekly price assessment for tungsten concentrate, 65% WO3, in-whs China, was 124,500-126,000 yuan per tonne on Wednesday, widening upward by 500 yuan per tonne from 124,500-125,500 yuan per tonne a week earlier.

“I suppose the China tungsten market went up mainly due to already tight spot availability, and based on its own supply and demand situation, rather than being affected by the 2024 economy targets,” a China-based tungsten source said.

“We do not feel much confidence after the economic announcement in the Two Sessions,” a second China-based tungsten source said. “Tungsten downstream demand has not shown any improvement.”

Chinese vanadium prices rose following a month-long decline because many vanadium producers or traders have, to some extent, used up their inventories, but not because of the boost in confidence arising from the 2024 economic targets, market sources said.

Fastmarkets’ weekly price assessment for vanadium pentoxide, 98% V2O5 min, exw China, was 86,000-87,000 yuan per tonne on March 7. This was up by 2,000 yuan per from tonne from 84,000-85,000 yuan per tonne on February 29 but down by 3,000 yuan per tonne, 5.58%, from 89,000-90,000 yuan per tonne on February 8.

The corresponding weekly price assessment for vanadium nitrogen, basis 77% V, 16% N, exw China, was 131,000-134,000 yuan per tonne on Thursday. This was up by 1,000-1,500 yuan per tonne from 129,500-133,000 yuan per tonne on February 29, but down by 6,000-8,000 yuan per tonne, 5.91%, from 137,000-142,000 yuan per tonne on February 1.

“Honestly, I do not understand why the China vanadium prices rose this week because the weak downstream steel fundamentals did not change at all,” a China-based vanadium source said.

“I heard that the Central Bank of China intends to put more limits on financial aid to industries with overcapacity,” a second China-based vanadium source said, “which means that industries with excess production, such as ferro-alloys, will find it more difficult to get loans from the banks.

“Even though the China vanadium prices ticked up this week, I believe this will not last long, given the still sluggish real estate and infrastructure sectors,” the same source added.

Manganese ore and alloy markets responses mixed

There were mixed responses from manganese market participants toward the Two Sessions’ government work report.

“The report is too vague,” one international manganese ore supplier said. “I don’t expect any effect on the manganese ore and alloy market. Let’s wait for any announcement of specific stimulus packages to shore up the property market.”

A Chinese manganese ore and alloy trading company believed that the 5% GDP growth target for 2024 was “too conservative, adding no confidence to the market.”

The prices of both silico-manganese and ferro-manganese in Chinese spot markets fell over the week, because of existing weak fundamentals and falling futures price for silico-manganese traded in the Zheng Commodity Exchange, the manganese alloy trading source told Fastmarkets.

Fastmarkets’ weekly price assessment for silico-manganese, 65% Mn min, max 17% Si, in-whs China, was 5,800-6,000 yuan per tonne on March 8, compared with 5,900-6,050 yuan per tonne on March 1.

And the assessment for ferro-manganese, 65% Mn min, max 7% C, in-whs China, was 5,450-5,600 yuan per tonne on March 8, down from 5,500-5,700 yuan per tonne a week earlier.

But another manganese ore source was more positive, because of the following three factors.

First, the exchange of old for new consumer goods and expanding domestic consumption meant that there would be higher demand for manufacturing products, which will eventually increase the demand for ferro-manganese to produce flat steel.

Second, the construction and supply of affordable housing will improve the demand for silico-manganese for producing construction steel, such as rebar.

Third, China’s increasing purchases of new energy vehicles (NEVs) will add to the use of manganese in batteries.

“I personally think that the Two Sessions are sending positive signals, at least in 2024,” this source told Fastmarkets.

NEV sector adds confidence to ferro-chrome markets

In the ferro-chrome market, the impressive production and sales of NEVs in China gave confidence to market participants, despite the Two Sessions having little overall effect on the commodity market, according to market sources.

“Overall, the effect of the Two Sessions on ferro-chrome market sentiment is limited,” one Chinese ferro-chrome smelter source said.

“However, the new energy vehicle market is a spotlight. The NEV industry supports demand for stainless steel,” the smelter added. “In other words, [the economic targets are] promising for [the consumption of] ferro-chrome.”

The price of ferro-chrome in the Chinese spot market remained stable, with high availability of the material and rollovers from leading stainless mills in their monthly-set tender prices for high-carbon ferro-chrome.

Fastmarkets’ weekly price assessment for ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China, was 8,800-9,000 yuan per tonne on Tuesday, unchanged since December 19, 2023.

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