GLOBAL FERRO-SILICON WRAP: Chinese, Europe markets steady while US prices extend gains [CORRECTED]

Chinese ferro-silicon prices held onto the previous week’s gains last week despite steel mills lowering their tender prices for May, which reflects an increase in domestic supply.

In the USA, ferro-silicon prices have also added to gains from the previous week amid increased replacement costs while the European market has been steady despite little trading activity.

  • Chinese ferro-alloys smelters dash hopes of higher tender prices
  • US replacement costs push prices higher again
  • European market hemmed in trading range

Chinese market holds steady despite lower tenders from steel mills
Chinese ferro-silicon spot prices were unchanged last week but sentiment worsened after major mills lowered their tender prices for May.

Metal Bulletin assessed the spot ferro-silicon price in China at 5,400-5,600 yuan ($786-815) per tonne on Friday May 5, in line with the previous week.
Metal Bulletin’s ferro-silicon fob price also held steady at $1,110-1,160 per tonne on Friday.

Hebei Iron and Steel, the country’s largest steel mill, announced a cut of 250 yuan to its ferro-silicon purchase price for May delivery to 5,800 yuan per tonne from 6,050 yuan in April.

“The mills’ tender price cuts are almost within our expectations. Supply has increased because the previous high price boosted output from smelters,” a Ningxia producer said.

China produced about 360,000 tonnes of ferro-silicon from major production bases in the country April, up 11% from the previous month, according to local data provider

“The spot market is stable this week... the price is likely to move down in the near term,” a Gansu-based smelter source said.

US prices extend gains
US ferro-silicon prices continued to strengthen over the past week – suppliers are raising their offers in response to high cost of replacement for material outside of the USA.

Spot ferro-silicon prices increased to 77-80 cents per lb on Thursday May 4, up on the low end from 76-80 cents previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Market activity has been subdued while negotiations for third-quarter supply are a few weeks away. Still, suppliers continue to raise offering prices, increasingly factoring in the cost of replacement given elevated prices overseas.

“We expect pricing to be closer to replacement costs, which are now over the 80 cents per lb mark,” a supplier source told AMM.

“A lot of the cheap stuff is gone now and we should see the replacement costs more of a factor in pricing,” a second supplier source said.

While the price rise may be slow at first, market participants believe the effect of high replacement costs will be amplified when third-quarter negotiations pick up.

“We should start to see some buyers coming out for the third quarter before too long, and the higher prices should show up a lot more at that point,” a third supplier source said to AMM.

European market steady; Brazil imports capped
The European spot ferro-silicon market has been steady in the early days of May, with steelmakers taking the bulk of their alloy in longer-term contracts, while suppliers are holding their offer prices amid relatively low availability.

The European ferro-silicon market is at a level last seen about six years ago, according to Metal Bulletin data, at €1,220-1,350 ($1,331-1,473) per tonne on Friday May 5.

The European spot price range was €1,310-1,450 per tonne in May 2011 (a year when it peaked at €1,450-1,510 per tonne in January), according to Metal Bulletin data.

One trader reported a sale of 50 tonnes of ferro-silicon to another trader in Germany for €1,350 per tonne for prompt shipment in May.

“The market is around €1,280-1,350 per tonne,” he said. “European steelmakers have long-term deals with ferro-silicon producers and such deals carry a discount that puts the deal around the lower end of the current pricing range but does not reflect the spot market.”

There have been limited imports from Brazil, where producers such as Ferbasa are opting to cut production – they are instead selling their energy quota back to the national grid. The company earns more in selling power in this way than it would producing and selling ferro-silicon.

Brazil has been troubled with reduced energy supply from hydro-generated power because of drought conditions in the country for many months.

Brazilian exports of ferro-silicon with more than 55% silicon content fell 58% year-on-year to 6,590 tonnes in April this year, according to government data. Shipments dropped by more than half in the first four months of 2017 to 26,550 tonnes year-on-year.

Imports from Russia and China, both of which are subject to anti-dumping duties to the European Union, are at a negligible level.

Russian ferro-silicon exports to the EU, which are subject to anti-dumping duties of 18-23%, have been in short supply due to firm domestic demand in Russia.

The EU has anti-dumping measures of 30% on imports of ferro-silicon from China from where most ferro-silicon exports go to the USA.

This article was updated on Monday May 8 at 19:17 BST – the previous week’s report had erroneously been published.

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