GLOBAL FERRO-SILICON WRAP: Prices diverge by region; only China sees uptick on futures strength

Ferro-silicon prices rose in China on Friday March 17, boosted by rising futures prices, as the US market softened and prices in Europe held for the third week running.

Metal Bulletin’s price quotation for domestic Chinese ferro-silicon rose to 5,600-5,800 yuan ($811-840) per tonne in warehouse China, up from 5,200-5,300 yuan per tonne on March 10. 
Metal Bulletin’s quotation for ferro-silicon exported from China rose to $1,100-1,170 per tonne fob China, having previously held at $1,000-1,070 per tonne for two weeks. 

The ferro-silicon futures price on Zhengzhou Commodity Exchange rose throughout the week and reached its highest level since August 2014 on Friday. 

Major smelters in China had not offered during the week to March 10 and only returned to the market on Thursday March 16, with higher offers.

One large ferro-silicon producer raised its offer by as much as 20% from two weeks ago.

Smaller smelters followed, leaving most offers in the 5,800-6,000 yuan per tonne range, but no concluded deals were reported to Metal Bulletin.

Sources in China noted the lack of actual transactions but added that the domestic operating rate is low, capping producer stocks.

“Smelters lifted their offers yesterday. The rise is larger than we expected and while no fresh deals can be heard for the time being, the price will definitely move up,” a trader in Beijing told Metal Bulletin.

A trader in Ningxia said he was not prepared to buy at today’s offer levels.

“The smelters’ offers are too high; I don’t have any intention of buying, I am just waiting to see how mills will response to this,” the Ningxia trader said.

Most mills have completed purchasing for March and may start to buy volumes for April within the next week or so, sources told Metal Bulletin.

Competitive supplier offers in USA
In the USA, the exact opposite occurred, as suppliers offered more competitively to place volumes amid second quarter negotiations. 

Spot ferro-silicon prices slipped to 77-80 cents per lb in warehouse Pittsburgh on March 16, according to Metal Bulletin sister publication AMM’s assessment. 

The price was down slightly on the low end from 78-80 cents per lb previously.

While spot market activity has been lacklustre, mills and suppliers have been engaged in second-quarter negotiations for long-term contracts.

“Prices have been getting a little more competitive as we close in on the second quarter,” a supplier source said.

“People get nervous that if they don’t move [stock] before the second quarter, they are going to be stuck with the material,” the source added.

Cheaper material has been bound for the USA in recent weeks while overseas prices were weakening. This has gradually pushed US prices down from highs of 80-84 cents per lb earlier in the year.

“There was a buying opportunity where prices came off in Asia, where material in China and Malaysia was available for attractive enough prices for traders to bring over material,” a second supplier source said.

“Prices have bumped back up out of China, and it has sealed off some of the buying opportunities that had emerged for traders,” the source added.

Other US supplier sources pointed out that recent price increases overseas have begun to close off the cheaper avenues for replacement material, as overseas producers target regions where prices are higher.

“Ferro-silicon is seeing signs of life both around the world and here,” a third US supplier source said, noting stronger markets elsewhere.

“Brazilian and Malaysian ferro-silicon will be now heading to Europe, not the USA, until prices here become more attractive,” the source added.

As a result, market participants are anticipating an end to downward pricing pressure in the USA.

“I think that there is still some cheap material in the market, but limited quantities,” a fourth supplier source told AMM.

“The fact prices are going back up overseas should keep this market from falling out too much further,” the source said.

European prices flat 
European ferro-silicon prices assessed on March 17 held for the third consecutive week at €1,120-1,200 ($1,202-1,288) per tonne, delivered, amid thin trading.

Consumers have been able to secure deals towards the low end of the trading range and even below, offsetting efforts by traders to push prices higher, one trader in Europe told Metal Bulletin.

“We see an uptrend in traders’ pricing but on the customer side prices are still low. I hope to see the European market influenced by the Chinese market,” the trader said.