GLOBAL FERRO-SILICON WRAP: Tight supply fuels Chinese run; US, EU markets level off

Chinese spot ferro-silicon prices have continued a firm ascent on bullish sentiment amid tight supply, recording their highest levels since the start of 2014.

  • Production concerns drive Chinese domestic, export prices
  • EU market levels off amid summer slowdown
  • Tight spot supply keeps US prices stable

The Metal Bulletin assessed spot price for ferro-silicon, basis 75% Si in-warehouse China, rose to 6,500-6,700 yuan ($967-996) per tonne on August 4, up from 6,300-6,500 yuan per tonne previously.

The domestic price has moved up steadily over the past week, following Hesteel (Hebei Iron & Steel) lifting its monthly purchase price for ferro-silicon, basis 72% Si, to 6,780 yuan per tonne for August delivery, which boosted a bullish market sentiment.

In addition, output of silica – a raw material for the production of ferro-silicon – has been continually disrupted in north-western China as a result of environmental inspections, which has led to more concerns over the stability of ferro-silicon production in the near future.

Suppliers, as a result, have been firm with their quotations.

“Price inched higher as supply tightness persisted in the market,” a producer said. “We don’t consider selling below 6,700 yuan per tonne cash, ex-works.”

The Metal Bulletin Chinese ferro-silicon export price, basis 75% Si, rose to $1,330-1,350 on the same pricing day, up 2.3% from previously.

European market stabilises despite inactivity
European spot ferro-silicon prices have been steady in the past week amid low key activity, with consumers content to rely on longer-term delivery settlements for their production schedules.

The previous week the market had dropped below €1,200 ($1,423) per tonne for the first time since March as suppliers cut their offer prices to encourage more business.

Metal Bulletin’s price quotation for standard grade (Si 75%) ferro-silicon delivered in Europe was assessed at €1,170-1,235 per tonne.

One deal for 100 tonnes of standard grade ferro-silicon was reported booked at €1,200 per tonne in the past week, while one consumer in Germany was reported to have booked a few truckloads of alloy for shipment in the next few weeks at €1,235 per tonne.

Many ferro-alloys traders in Europe are on vacation amid the seasonal slowdown in heavy industry and markets are expected to be relatively quiet for at least most of August, with trading activity seen picking up in September.

The European spot ferro-silicon market was at an annual low of €1,120-1,200 per tonne ($1,328-1,423) from late February until mid-March this year, and then peaked at €1,220-1,350 ($1,447-1,600) per tonne through most of April.

US spot market falls dormant
The US ferro-silicon market remained level, as spot market activity ground to a halt.

Spot prices for ferro-silicon edged up to 80-84 cents per lb on August 3, unchanged over the past week, according to Metal Bulletin sister publication AMM’s latest assessment.

The summer spot market has continued to be inert, as buyers have been largely absent from the market.

“This week was one of the slowest we have seen in a while,” a supplier source told AMM. “Spot market enquiries were nearly non-existent.”

Although the market has been inactive, spot prices have remained steady as a result of continuing tightness in the US market.

“Some people have discussed lower prices for inter-trade offers, but no one will offer me anything,” a second supplier source told AMM. “It is still very tight, and everything I do to end-consumers has been at the high end of the range.”

Market participants suspect that prices will continue to hold strong amid continued overseas strength.

“Lower numbers just don’t make sense based on European and Chinese numbers,” a third supplier source said.

“I don’t see how anyone can justify the costs of bringing it here to sell below current prices,” the second supplier source added.

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