Ann: 30 June 2023 Quarterly Market Update, page-41

Globalferro-silicon market dragged down by myriad headwinds

Ferro-siliconprices edged downward amid a lack of market activity caused by numerousheadwinds, which included a dip in ferro-silicon futures prices, a weaker yuanagainst the dollar, resumption of ferro- silicon capacity at major productionhubs and

reports of crude steel output limits, sources told Fastmarkets.

Spot marketconfidence was slightly undermined due to reports that steel mills in Chinawill be required to cap crude steel output to a level identical to that of theprevious year, sources said.

“If steelmills

cap crudesteel output, there will definitely be an impact on the upstream ferro-silicon

marketbecause it implies that downstream demand will not improve,” a ferro-silicon

marketparticipant said.

Ferro-silicon

futuresprices responded quickly to the reports, declining notably in the week

from August10-17.

According

to theZhengzhou Futures Exchange, the most-actively traded September ferro-silicon

futurescontract closed at 6,842 yuan per on August 17, down by 3.25 % from 7,072

on August10.

The spotprice

was heavilyaffected by the weakening ferro-silicon futures, with many market participants

taking aquite pessimistic attitude, a second ferro-silicon market source toldFastmarkets

adding thatdespite the rising ferro-silicon enquiries, the downstream buyer would

prefer tomake a lower bid amid a lack of deals.

Fastmarkets’

priceassessment for ferro-silicon,

75% Si min,in-whs China, was 6,900-7,300 yuan ($951-1,006) per tonne on Wednesday

August 16,down by 2.74% from 7,200-7,400 yuan per tonne on August 9.

Fastmarkets’

correspondingprice assessment for ferro-silicon, 75% Si min, export, fob China,

was$1,300-1,350 per tonne on the same day, down by 20 yuan, or 1.49%, from

$1,320-1,370per tonne on August 9.

Fastmarkets’

priceassessment for ferro-silicon,

75% Si min,cif Japan, was

$1,320-1,370

per tonneon Wednesday, also down by 20 yuan, from $1,340- 1,390 per tonne on

August 9.

The yuan’sdepreciation

against thedollar also contributed to the downward pressure on ferro-silicon prices,

sourcessaid.

The offshore

Chineseyuan fell below 7.33 yuan per dollar on Wednesday August 16, hitting its

lowest ratesince November. The onshore yuan also hovered near 7.3 yuan per dollar.

“Wheneverthe

yuandepreciates, the ferro-silicon export price follows suit, which may increase

the volumeof ferro-silicon export deals. However, since Europe and Japan are

in a summerlull, the demand for ferro-silicon still remained sluggish,” a third

ferro-siliconmarket participant said.

News offerro-silicon

productionresumption in major production hubs also contributed to the dip inferro-silicon

spotprices, sources told Fastmarkets.

Due to

severelosses in the ferro-silicon industry, overall ferro-

siliconproduction

in thefirst half of 2023 has declined dramatically, sources said.

However,since

thebeginning of July, due largely in part to the reduction of electricity costs

in somemajor production hubs, ferro-silicon pro t margins have improved and more

ferro-siliconproducers resuming production, which led to a great supply of the

material.

In July,the

operationrate of ferro-silicon manufacturers increased by 2.7% compared with June.

Totaloutput of ferro-silicon in July reached around 430,000 tonnes, an

increase of5% on a monthly basis, fourth ferro- silicon market source said.