RESEARCH: Ferro-alloy prices forecast to remain elevated through Q2 2021 on supply shortfall and rising demand

This month’s key ferro-alloy forecast highlights:

•  Impressive advances in ore and alloy prices persisted in March, with most markets posting significant price gains. Strengthening demand from steelmakers along with supply shortages and depleted inventories in numerous markets, as well as freight and transportation issues, continue to propel prices higher. We are forecasting upward pricing momentum to continue into Q2 2021 across most ore and alloy prices as we do not see a remedy to supply-demand imbalances in the near term.

•  European ferro-silicon producers are offering alloy above the current range for prompt shipment, with suppliers targeting €1,600 per tonne since they have little to spare outside of second-quarter allocated material. European imports are at a reduced level, with few imports arriving from Brazil, where output is going to the domestic market or to North America. Firm Asian demand and the container shortage is deterring exports into Europe from Asia. There has also been reduced production in Ukraine due to longstanding political issues. Industry sources in Europe say they have heard of a restart in Ferroglobe’s production in recent weeks, but only at a low level. If so, it is likely that Ferroglobe is only producing relatively small amounts of ferro-silicon so as not to upset the price rally. US prices have also increased sharply over the past month, and we understand suppliers are targeting $1.40 per lb. We are forecasting further gains in ferro-silicon prices in Q2 2021.

•  The strong upward movement in spot markets for chrome materials during early 2021 is now being replicated in the market for contract purchases. South African ferro-chrome smelters achieved a 32% increase in charge chrome contract sales to European buyers for Q2 2021. The increase is the largest quarterly movement in prices since Q3 2017. The previous movement should be considered as instructive, however, given that it was a large pullback after a similarly-sharp increase just six months prior in Q4 2016. Increased availability of chrome materials and increasing inventory levels could see contract prices downward correct later this year despite the short-term outlook for spot prices remaining upbeat.

Click here to view the Ferro-alloys Market Tracker in full.

If you are not a subscriber but would like see a free sample report, please click here.