GLOBAL FERRO-SILICON WRAP: Chinese consumers raise their bid prices as US, European markets slip again

Chinese spot ferro-silicon prices increased again last week, extending a run from the previous week as smelters reacted in line with higher bid prices from major steel mills. Meanwhile, the US and European markets continued to weaken.

• Tight Chinese supply cements rally
• US price undermined as suppliers compete
• Europe market gives way to seasonal pressures

Metal Bulletin’s assessment of the Chinese spot ferro-silicon price moved to 5,700-5,800 yuan ($840-855) per tonne on Friday June 29, up 100 yuan. The Chinese export fob price also moved up, with exporters increasing their prices to $1,140-1,170 per tonne, up $20 at the low end of the range.

“The latest bid price from Hegang (Hebei Iron and Steel Group) is at 6,200 yuan and [ferro-silicon] supply is tight, so prices will rise [further],” one producer in China said. Hegang’s most recent bid price was 400 yuan higher than its June purchase price of 5,800 yuan per tonne including delivery costs.

“The [ferro-silicon price] increase is in line with market expectations [and] we also increased our export offers, although we don’t have many cargoes of ferro-silicon to export,” a second producer said. Chinese ferro-silicon exports are subject to a 20% export tax.

US market off more than 2%
The US ferro-silicon market dropped last week on increasingly competitive offer prices from suppliers ahead of a national holiday on July 4. Spot prices for ferro-silicon in the USA moved to 78-82 cents per lb on June 29, down 2.4% from 80-84 cents per lb the week before, according to Metal Bulletin sister publication AMM’s latest assessment.

US traders and suppliers have been trying to clear their stock levels and secure sales volumes, booking profits before the Independence Day holiday.

“It seems like a couple of suppliers were willing to be aggressive on a few of the last RFQ’s (request for quotation) before the end of the quarter to sell tonnages, but everyone else seems to be sticking around replacement costs,” a supplier source told AMM. “I have no interest in selling at these lower numbers.”

Some of the more aggressive offer prices confused industry sources as current replacement costs from abroad are above those levels in the USA. Sources said they are also confused by such lower offer prices given relatively tight domestic supplies.

“Particularly with the dollar weakening recently there is no real reason competition-wise or material availability-wise why anyone should feel compelled to undercut prices like this to sell right now,” a second supplier said. Some industry sources reckon lower offer prices may be only temporary as stock levels are reducing against relatively high replacement costs.

“There is no reason why the USA should be cheaper than elsewhere in the world, like it has been for much of the year,” a third supplier source said. “There should be more of a premium to the global market.”

“If people want to sell now at cheap numbers, they can go ahead. Then we’ll have a chance to sell at higher numbers at the middle of the third quarter.”

European downward trend persists

The European ferro-silicon market dropped last week as domestic suppliers cut their offer prices to secure deals before the seasonal slowdown, while there was a steady rate of imports from less traditional sources such as Malaysia.

Metal Bulletin’s price quotation for ferro-silicon delivered in Europe moved to €1,210-1,260 ($1,382-1,439) per tonne on Friday June 30, down €10 from previously.

“The ferro-silicon spot market in Europe is seeing virtually no demand from steelmakers,” one industry sources said, adding that consumers have apparently agreed all of their third quarter delivery settlements.

“We have already heard of offer prices below €1,190 a tonne and soon all offer prices may be below that level as July and August are the months of seasonal shutdowns when there is almost no ferro-silicon demand from European steelmakers.”

Malaysian exporters are offering ferro-silicon to Europe at a level slightly below European domestic prices, according to European dealers. Other more traditional sources of exports to Europe, such as Brazil, Venezuela and Russia, have been at a negligible level for several weeks due to a combination of high energy costs and steady domestic demand.