Europe FeSi price may jump 10% near term - sources

European ferro-silicon prices, which have been rallying since late October, will climb further near term and potentially challenge the annual peak of €1,275 per tonne on tight supply both in Europe and non-EU countries and a gradual recovery in consumption, industry sources said.

Fastmarkets last assessed the price for ferro-silicon lumpy basis 75% Si (scale pro rata), delivered Europe at €1,120-1,170 ($1,357-1,418) per tonne ddp on Friday December 11.

Although one supplier reported a deal for several hundred tonnes of standard-grade material for first-quarter shipment above €1,200 per tonne, a level that should push spot prices up by January, the supplier added.

One consumer in Germany reportedly bid €1,150 per tonne for a few truckloads on a spot basis but had that bid knocked back because traders expect prices to surpass €1,200 per tonne in the near term, Fastmarkets heard.

Ferro-silicon producers in Europe are refusing to sell below €1,200 per tonne, however, and are offering alloy at €1,250 per tonne for prompt demand because producers have very little available apart from long-term deals, sources said.

“With the high number of buying inquires in Europe and Turkey, ferro-silicon prices jumped both on high prices in China and a general alloy shortage in Europe,” one European supplier said.

“We started to offer alloy at €1,150 ddp to Europe, expecting the market to reach €1,200 per tonne in the first quarter, but in recent days we increased our offers to €1,200-1,250 per tonne and steel mills are interested,” the supplier said, adding that his firm was already quoting offers of 95 cents per lb to potential buyers in the United States.

The US market has also been climbing up firmly in the past two weeks, with Fastmarkets’ ferro-silicon 75% Si, in-whs Pittsburgh assessment at $0.88-0.91 per lb on December 10, up from $0.80-0.85 per lb on November 26 and up by 4.07% week on week.

There is more buying interest from European steelmakers right now, although not as much as this time last year and despite the fact that traders need to restock, sources said.

Consequently, there’s a possibility that the ferro-silicon shortage in Europe may become more acute near term because some industry sources are expecting prices to hit €1,300 per tonne and above.

One European producer was reportedly selling 500 tonnes of ferro-silicon at €1,200 per tonne for December delivery, while European consumers have been struggling to get offers from non-EU countries, Fastmarkets heard.

Malaysian and Brazilian exporters have said they cannot ship ferro-silicon before February or March due to the tight availability of material and containers, particularly with Asian prices surging for the moment.

“Steelmakers are out for first-quarter deliveries and finding there’s not much available from domestic producers or from overseas,” one trader said. “China is having trouble getting containers and container charges are up to $3,800 per container, up from around $1,000 per container usually. The European market seems set to increase above €1,200 per tonne near term because of little volume on the ground and few imports entering Europe, with most Brazilian exporters out of material until February at the earliest,” the trader added.

Malaysian exporters are not offering any material to Europe, while Brazilian sellers have small tonnages of alloy to offer at around $1,200-1,270 per tonne cif (€1,045-1,105 per tonne ex-warehouse), European traders said.

Small volumes of Ukraine-origin ferro-silicon were available at €1,100 per tonne ddp, with one deal for a couple of truckloads reported sold into Eastern Europe, but that price level appears to have disappeared now.

A couple of European ferro-silicon production plants have almost sold out of their output due in January and February, yet there is a chance that Ferroglobe may restart production in the first quarter if prices consolidate higher, trading sources said.

One industry source previously told Fastmarkets that prices would have to move above - and be sustained at - €1,000 per tonne delivered for Ferroglobe to consider such a move. Although, that move would also increase the prospect of a dampening effect on market prices, which would take a few weeks before production ramped up to capacity.

Ferroglobe will review its production of standard-grade ferro-silicon in Europe early in 2021, with any decision to restart furnaces dependent on market supply, demand and prices, Fastmarkets understands.

Production costs may also be an influential factor because energy prices in Europe tend to rise over the winter months, sources that spoke to Fastmarkets said. Ferro-silicon production uses about 8,000kW per tonne, while silicon production uses about 12,000kW per tonne.

Europe typically consumes around 600,000 tpy of ferro-silicon, comprising 400,000 tonnes of domestic production and 200,000 tonnes of imports, Fastmarkets understands. But that ratio has changed in recent years while European steelmakers operate at reduced output rates as a result of lower prices for finished steel products and because of large volumes of steel imports, particularly from China, sources said.

Ferro-silicon is used to remove oxygen from steel and improve the final quality of the finished steel. Specialty ferro-silicon, such as high-purity and low-carbon ferro-silicon, is used in the production of special steel for transformers, motors, ball-bearings and shock absorbers, as well as for cord steel for vehicle tyres and in the production of stainless steel.

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