GLOBAL FERRO-SILICON WRAP: Chinese, US prices boosted by supply constraints

The Chinese and US ferro-silicon markets continued to strengthen last week amid tight supply while the European market held steady, although seasonal weakness could start to pressure prices lower there soon.

  • Chinese domestic market strengthens on improved demand, tight supply
  • Strong Chinese domestic market limits exports but fob offers rise
  • US market rebounds on thinning inventories
  • European prices stabilise but slowing demand still poses threat

Chinese prices bolstered by strengthening demand
Chinese ferro-silicon spot price rose this week after producers raised their offers again to reflect tight supply as well as better downstream demand.

Metal Bulletin’s ferro-silicon price for China’s spot price of 5,900-6,100 yuan per tonne on Friday July 14 was up 200-300 yuan from a week earlier.

“We further lifted our ex-works offers this Monday. We don’t have any stock of this cargo and now only producing to deliver our orders,” a major producer in China told Metal Bulletin.

“Downstream demand is good, not only from mills but also from the magnesium industry,” the producer added.

Metal Bulletin assessed Chinese magnesium metal at 14,200-14,600 yuan per tonne in the third week of June, up 200-300 yuan from early June, before it retreated to 14,100-14,400 yuan recently.

On Friday July 14, the China’s fob price was up $40-50 from the previous week at $1,180-1,220 per tonne fob China, although the market was largely inactive.

“Export trade is limited… we are in no hurry to sell due to the robust domestic market. As well, supply itself is tight – there’s not much cargo to offer to export,” a major exporter in China said.

US market rebounds on limited availability
The US ferro-silicon market rebounded last week when suppliers were able to achieve higher prices amid a supply squeeze.

Spot prices for ferro-silicon moved to 80-82 cents per lb on July 13, up 1.9% at the low end from 77-82 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Following three weeks of declines amid aggressive offers from suppliers looking to book tonnages for the third quarter and the second half, prices rebounded, reflecting scarcer uncommitted material.

“Ferro-silicon import numbers are way down but the capacity utilisation rate is up,” a supplier source told AMM. “Therefore there is no oversupply but [there] should be a tightness to this market.”

Several traders and suppliers have been seeking material over the past two weeks after inventories dwindled, market participants noted.

“The Chinese imports are non-existent because traders are not willing to take a position,” a second supplier source said.

US imports of Chinese ferro-silicon totalled 1,812 tonnes over the first five months of this year, down 42.3% year-on-year from 3,142 tonnes.

“I continue to sell to the trade at 80 cents [per lb in] warehouse and they continue to buy,” the second supplier added.

A third supplier source agreed, noting he was trying to purchase anything he could from traders offering cheaply but was not able to find prices below index.

“I’m convinced that it has bounced. There’s really nothing in warehouse right now,” he said

European market stabilises but potential pressure from summer slowdown, imports lingers
European spot ferro-silicon prices have been steady in the past week, stabilising after easing in the previous couple of weeks, with the bottom of the range at €1,200 per tonne proving something of a psychological barrier for now.

But the market may be vulnerable to losses in the near term, with consumer demand virtually absent amid the seasonal slowdown.

There have been reports of lower-priced deals albeit for longer-term delivery and offer prices below the current spot price trading range.

Metal Bulletin’s price quotation for ferro-silicon delivered in Europe held at €1,200-1,250 ($1,369-1,427) per tonne on Friday July 14.

“We have had a few offer prices ranging between €1,180 and €1,220 per tonne in the past week, although we’ve not agreed anything and we’re not in a hurry to,” one major consumer said. “If we do anything, it will likely be around €1,200 per tonne – certainly not above €1,200 per tonne.”

One trader reported a deal for 1,000 tonnes of standard grade ferro-silicon for delivery through the rest of the current quarter at €1,150 per tonne delivered.

The European ferro-silicon market has dropped from a peak so far this year of €1,280-1,350 per tonne in mid-May due to increased availability of imports, notably from Malaysia.

But that line of supply has eased so far this month after an almost six-fold jump in June, probably because of the traditional summer slowdown in Europe, according to European market dealers.

Shipments of ferro-silicon to the EU from Brazil in June jumped to 3,777 tonnes, although shipments of ferro-silicon were down almost 48% in the first six months of 2017 year-on-year at 40,282 tonnes.