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.
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