GLOBAL FERRO-SILICON WRAP: China spot price holds steady amid tight supply; inactivity weighs on US, EU prices

Global ferro-silicon markets remained largely inactive last week, with prices suffering slight declines in the US and European markets.

  • China domestic market stabilizes while export offers edge up
  • European suppliers cut offer prices to prompt demand
  • US spot market trading activity remains thin, prices continue gradual decline

Chinese domestic market stabilizes; export offers edge higher

Chinese spot ferro-silicon prices were steady last week amid tightened supply. Market sentiment was also buoyed by the news that a major domestic steel mill had raised its monthly ferro-silicon purchase price.

China’s domestic spot price for ferro-silicon basis 75% silicon stood at 6,600-6,900 yuan ($994-1040) per tonne on Friday November 10, according to Metal Bulletin’s latest assessment, unchanged from the prior week.

Market participants attributed the stable domestic ferro-silicon prices to the tight supply of material with 75% silicon content - generally sold into the export market - as domestic refineries are increasingly less interested in producing it, especially when demand from foreign markets is sluggish.

Providing further support to domestic ferro-silicon prices was the news that major Chinese steel producer Hesteel, formerly Hebei Iron & Steel, had raised its November purchase price for the ferro-alloy.

Hesteel set its November tender price for ferro-silicon, 72% Si min, at 7,000 yuan per tonne on a delivered basis, up 600 yuan from previous month.

Meanwhile, Chinese export prices edged higher last week as they continued to play catch up with domestic ferro-silicon prices.

The fob Chinese ferro-silicon export price stood at $1,350-1,380 per tonne on Friday, up $10 on the high end of the range compared with $1,350-1,370 per tonne a week earlier.

European suppliers cut offer prices; bounce seen
The European ferro-silicon market dropped last week, with suppliers cutting their offer prices to encourage prompt demand that has been virtually absent this quarter.

Metal Bulletin assessed European ferro-silicon prices at €1,300-1,350 ($1,515-1,574) per tonne on November 10, down €50 at the high end of the range from €1,300-1,400 per tonne previously.

There were no reported deals, however one trader said he had an offer of around 150 tonnes of standard grade (75% Si) ferro-silicon put to him at €1,290-1,320 per tonne, although he had yet to accept it.

The bottom end of the current trading range has been unmoved since October. The European spot market was at an annual peak this year of €1,410-1,525 per tonne in September after an annual low of €1,120-1,200 per tonne in March.

Traders believe the European market may move higher in the coming weeks as domestic availability is relatively tight, while international markets such as key producer China are strengthening in price. This quarter Chinese smelters are making less 75% ferro-silicon, which they sell mostly for export.

The ferro-silicon market is also firm in South America where Brazil, along with China, exports supply to the United States, as well as to Europe. Any increase in South American ferro-silicon exports to the US, which relies heavily on imported ferro-silicon, should tighten supplies to Europe, according to European suppliers.

Moreover, US importers sometimes look to Europe for supplies if Chinese and South American export prices increase steeply.

Europe typically consumes around 600,000 tonnes per year of ferro-silicon, relying on 400,000 tonnes of domestic production and 200,000 tpy of imports.

US spot market continues to suffer from inactivity
The US ferro-silicon market remained largely stable last week amid inactivity in the spot market, while negotiations for 2018 persisted.

US spot prices for ferro-silicon, in warehouse Pittsburgh slipped to 93-95 cents per lb on November 9, down 1 cent on the high end of range from 93-96 cents per lb previously, according to American Metal Market’s latest assessment.

A lack of notable spot market activity prevented significant price change at this time, as mills and suppliers continued to work toward 2018 long-term contract agreements.

The slight price softness over the last week marked a fifth consecutive weekly decline, with prices down 5.5% from 96-103 cents per lb on October 5.

Despite the gradual weakness over that time, market participants expressed optimism surrounding prices bottoming out at these levels due to increasing replacement costs.

“We talked to a lot of overseas suppliers this past week to check on replacement costs and numbers are way up across the board,” a supplier source said.

With overseas costs strengthening, market participants expect limited downside from current price levels.

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