Current Price of Ferro Silicon in China
Ferroalloy Online Feb 21, 2023. The ferrosilicon market is stable and slightly down, FeSi72 price changed slightly, and the factory quotation is stable at FeSi72% 7550-7700 yuan/ton natural block (EXW), standard block 7700-7800 yuan/ton. The price of FeSi75 still fell slightly due to the manufacturer’s inventory and the passive purchase of magnesium factories. Today, the price of FeSi75% was 7800-8000 yuan/ton in cash and the natural block was shipped out, a slight drop of ￥100 yuan/ton. The market price of 75# ferrosilicon has approached the factory cost.
Ferrosilicon Production
In terms of factories: last week (2.13-2.19), the daily output of ferrosilicon was 16,766 tons, a decrease of 175 tons from the previous period.
Magnesium metal: Today, the mainstream market price of Shaanxi magnesium plant is 20,900-21,000 yuan/ton, coal has stopped falling, and the sentiment of magnesium plants to protect prices has increased, and it is difficult to find lower-priced goods in the market for the time being.
In general: ferrosilicon futures followed the black market and rose to 8000 points. The sentiment of spot noodle factories to stop falling is strong. Pay attention to market transactions and factory start-up changes. It is expected that ferrosilicon will be in a state of consolidation in the short term.
Today’s ferrosilicon futures market followed the black market and stopped falling. The spot price is stable and has declined. The price of FeSi75% fell slightly due to the inventory of the manufacturer and the passive purchase of the magnesium factory. The price of 75# was quoted by the factory at 7800-8000 yuan/ton in cash, which fell 100 yuan/ton.
Analysis of Spot Price Trend of Ferrosilicon
At present, the main factors affecting the price of ferrosilicon are the supply and demand of ferrosilicon. As the price of ferrosilicon has dropped sharply and rapidly, the profit margin of ferrosilicon production has narrowed significantly, leading to the phenomenon of large-scale active reduction of production by manufacturers in major ferrosilicon-producing areas, especially in Ningxia. According to Mysteel, in the Zhongwei area of Ningxia, all ferrosilicon manufacturers except Maoye have shut down their furnaces.
We estimate that the affected weekly output will be around 18,200 tons, and this part of the output will gradually begin to be reflected in this week’s supply. In the case of active production reduction, the supply pressure of ferrosilicon will drop significantly, and the weekly output of ferrosilicon is expected to return to the level of about 100,000 tons/week.
However, in the context of weakening demand and a weak balance between supply and demand, prices will be more aimed at demand, and the dynamic actions of the supply side to move closer to demand can only alleviate the downward pressure on prices to a certain extent. Therefore, at present, the main contradiction between ferroalloy and ferrosilicon is still on the demand side, steel has not improved, and the ferroalloy side is not expected to have much improvement. The suspension of production in the Zhongwei area is considered to be just a positive move by the supply to move closer to the demand in the process of weakening demand. It may be able to ease the market sentiment in the short term, but it is not enough to reverse the overall downward trend of prices.
As the price of ferrosilicon has dropped rapidly and sharply, the profit margin of ferrosilicon production has narrowed significantly, which has caused the main ferrosilicon-producing areas, especially Ningxia, to actively reduce production on a large scale. According to news from Mysteel on July 20, all ferrosilicon manufacturers except Maoye have shut down their furnaces in Zhongwei area of Ningxia.
Proactive production cuts are due to a significant narrowing of profits following a rapid and sharp price drop
The price of ferrosilicon has continued to fall sharply since it peaked in April 2022. The spot quotation of Tianjin 72# ferrosilicon fell from 10,500 yuan/ton to 8,000 yuan/ton, with a cumulative drop of 23.8%. Accompanied by the rapid price drop, although the price of semi-coke raw materials has dropped, the cost of electricity has remained high, and the drop in the cost of ferrosilicon has been far less than the drop in price, resulting in a significant reduction in the profit of ferrosilicon, and some of ferro silicon supplier lose their money.
