GLOBAL FERRO-SILICON WRAP: Prices rise in China, USA on higher tender prices, tight supply

Ferro-silicon spot prices continued rising in China in the week to Friday July 28 after a major steel mill released higher tender prices for August and a producer raised offers.

  • Spot ferro-silicon prices follow mills’ tender prices higher
  • Spot prices edge higher in the USA on tight supply
  • Prices weaken in Europe on lower supplier offers

Metal Bulletin’s price quotation for spot ferro-silicon, basis 75% Si in-warehouse China, rose to 6,300-6,500 yuan ($935-965) per tonne on Friday, up 200-300 yuan in a week.

The higher price was attributed to Hesteel (Hebei Iron & Steel) lifting its monthly purchase price for ferro-silicon, basis 72% Si, to 6,780 yuan per tonne for August delivery, up 700 yuan from its July level.

“Major smelters further increased offer prices this week to reflect bullish sentiment. Prices for ferro-silicon raw materials like silica and semi-coke have increased a lot recently and demand from mills is robust,” a trader in Beijing told Metal Bulletin.

Metal Bulletin’s price quotation for Chinese ferro-silicon, fob China – which refers to material for export – rose to $1,270-1,350 per tonne fob China, $20-60 higher than the previous week. 

“All offers this week we received from China are above $1,300 [per tonne] fob China. The price has been increasing every week and I think it’s too high to accept,” a Seoul-based trader told Metal Bulletin.

Thin spot US availability supports
Prices also firmed in the USA due to tightening supply. 

Spot prices for ferro-silicon traded at 80-84 cents per lb on July 27, up 2 cents on the high end compared with the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.

Although spot activity remained limited amid the summer slowdown, suppliers were able to push prices as prompt availability thinned.

“It has been hit or miss on demand, but we are getting some good spot prices when mills have come to us to cover this week,” a supplier source told AMM.

“One steel mill came to us to cover after their long-term supplier couldn’t cover the order. It is telling that there isn’t that much on the ground right now,” the source added.

As available stocks have been dwindling, traders looking to restock have been met with higher prices overseas and this has begun to reverberate through the US market.

“We went out to all of the channels looking to bring in material – Brazil, China, Malaysia, etc – and the lowest cost basis we were looking at was roughly 82 cents [per lb],” a second supplier source said.

“If we could actually see some activity in the USA, we might actually be able to see these numbers run,” he added.

While some believe the market may have reached a turning point, the recently elevated prices have been met with scepticism by others due to the lack of activity.

“The narrative on replacement costs has been a factor for a while, but there has also been a disconnect between what should be happening and what actually has been happening for a while,” a third supplier source said.

“These numbers being talked about aren’t crazy, or even unfair, but I think they are still fairly untested. We need to see some more consistent and more significant activity at these levels before we can be sure the market has moved,” he added.

EU prices drop
In Europe, spot ferro-silicon prices dropped comfortably below €1,200 ($1,410) per tonne for the first time since March as suppliers conceded to lower prices.

Market participants warned last week that suppliers may relax offers to below that level to entice buying interest.

Metal Bulletin’s price quotation for ferro-silicon, basis 75%, delivered in Europe dropped to €1,170-1,235 per tonne, from €1,200-1,250 per tonne previously.

About 1,100 tonnes of confirmed business was reported to Metal Bulletin all the way across the trading range. Each deal met or exceeded Metal Bulletin’s minimum tonnage specification of 100 tonnes.

One offer, which was not accepted, was reported at €1,245 per tonne and a few data points relating to smaller parcels of material were submitted above the previous range.