GLOBAL FERRO-SILICON WRAP: US, EU prices under pressure approaching summer; Chinese market holds firm on supply tightness

US and European ferro-silicon prices were under pressure last week as quarterly negotiations wrapped up heading into the summer slowdown, while Chinese prices continued to remain firm on tightened supply.

  • EU ferro-silicon prices under pressure heading into summer slowdown
  • Excess imports, particularly from Malaysia, adding to downward pressure
  • US prices continue slide on aggressive quarterly negotiations
  • Continuing supply tightness keeps Chinese ferro-silicon prices firm

Summer slowdown drags on EU market

European spot ferro-silicon prices eased again last week due to lower offer prices. The move follows a fall in prompt demand from domestic steelmakers, some of which are starting their traditional shutdowns for maintenance in the seasonal summer vacation months of July and August.

Metal Bulletin’s price quotation for ferro-silicon delivered in Europe moved to €1,200-1,250 ($1,364-1,421) per tonne on Friday July 7, down €10 from previously.

“All major third quarter ferro-silicon requirements from steelmakers have been concluded, and for the time being we are mostly negotiating small to intermediate volumes,” one supplier said.

Suppliers reported booking deals at €1,220 per tonne delivered, with a couple of offers for a total of 620 tonnes of ferro-silicon split at €1,240 per tonne and €1,245 per tonne, respectively.

EU imports pressuring prices
European ferro-silicon prices have been dropping from an annual peak this year of €1,280-1,350 per tonne in mid-May due to increased availability of imports, notably from Malaysia.

That move has coincided with a fall in imports from traditional suppliers such as Brazil, although that stream of supply appears to be flowing back, according to the latest trade data.

Brazilian industry ministry data shows that June shipments of ferro-silicon to the EU from Brazil jumped almost six-fold to 3,777 tonnes year-on-year.

However, shipments of ferro-silicon (>55% Si) are down almost 48% in the first six months of 2017 year-on-year to 40,282 tonnes.

Total Brazilian ferro-silicon exports were 8,219 tonnes in June, off almost 12% year-on-year, but up almost 50% from May this year.

US prices slide on aggressive third quarter negotiations; rebound eyed

The US ferro-silicon market slid once again last week, as some market participants continued to offer aggressively as the last of third quarter negotiations wrapped up.

Spot prices for ferro-silicon in the USA slipped to 77-82 cents per lb on July 6, down 1 cent on the low end from 78-82 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Although the Fourth of July slowed down market activity within the USA, ferro-silicon prices continued to weaken while traders and suppliers attempted to place any leftover volumes for the third quarter.

“I think some people panicked a bit on second half and third quarter business,” a supplier source told AMM. “These lower numbers don’t make a lot of sense.”

While some suppliers offered overly aggressively to sell off material, believing it was their last opportunity, others used the panic as an opportunity to stock up material from traders eager to sell off.

“I am buying up anything I can find below the index numbers from traders,” a second supplier source told AMM. “Because I can’t get it anywhere else in the world cheaper than in a USA warehouse. Go figure.”

Market participants expressed confusion regarding the low prices, given that market supply remains tight at this time.

US imports of ferro-silicon continued to be limited in May, as inflows totalled 5,366 tonnes during the month, bringing the first five month total to 62,224 tonnes, down 18.6% from 76,457 tonnes during the same year-ago comparison.

“I think the US market is about to explode,” a third supplier source said. “Some anxious sellers dragged down pricing over the last few weeks, but world prices aren’t really dropping.”

“I don’t know where people will restock, so numbers should be on the way up shortly here,” he added.

Chinese market firm on thin inventories
The Chinese ferro-silicon spot market remained firm this week, with prices holding steady amid tightened supply of the alloy.

Metal Bulletin’s assessment of the Chinese spot ferro-silicon price stood at 5,700-5,800 yuan ($838-852) per tonne on Friday July 7, unchanged from the previous week. Meanwhile, the fob price was similarly flat at $1,140-1,170 per tonne.

“I am afraid that the price will rise if smelters maintain their current operating rates,” one major producer in China said.

“The overall supply of ferro-silicon [basis 75% Si] in China is very tight due to smelters lowering their production rates amid the low prices, while prices have now increased on the tight supply as well as firmer demand from the steel industry,” a second producer said.