Price trend

The ferrosilicon market saw a significant rebound in July, with the improvement primarily driven by improved sentiment. The recent strength in the ferrosilicon market was largely due to policy factors. On the one hand, the escalating anti-involutionary policies have led to an overall improvement in sentiment in the ferrous metals market. As a high-energy-consuming industry with significant overcapacity, the ferrosilicon industry faced potential elimination, particularly in Shaanxi, Qinghai, and Gansu, where small furnaces were concentrated. Furthermore, cost support was strengthening. According to the SunSirs’ Commodity Market Analysis System, on July 31st, ferrosilicon (grade: FeSi75-B; particle size/mm: natural lump) was quoted in the Ningxia region between 5,500 and 5,700 RMB/ton, with an average price of 5,528 RMB/ton, a 7.17% increase from the beginning of the month.

Influencing Factors

Raw Materials

Semi-coke: Anti-involutionary policies continued to escalate, prompting semi-coke companies to express a strong desire to raise prices. Furthermore, the National Energy Administration issued a notice on coal production capacity verification, strictly inspecting production mines in eight provinces (regions): Shanxi, Inner Mongolia, Anhui, Henan, Guizhou, Shaanxi, Ningxia, and Xinjiang. Following this news, bidding prices for Hongliulin lump coal rose slightly. With the improving ferrosilicon market and market sentiment driving semi-coke prices, it may be poised for another round of price correction. As of July 30, the mainstream price of small and medium-sized materials in Shenmu market was 535-630 RMB/ton, and the price of coke flour was 420-470 RMB/ton; the price of medium-sized materials in Fugu market was 585-630 RMB/ton, the price of small materials was 590-670 RMB/ton, and the price of coke flour was 410-520 RMB/ton; the mainstream price of coke flour in Zhongwei market was 490 RMB/ton; the price of mixed materials in Shizuishan market was 500 RMB/ton; the price of small and medium-sized materials in Ordos market was 500-600 RMB/ton, and the price of coke flour was 490 RMB/ton; the price of small and medium-sized materials in Hohhot market was 620 RMB/ton, and the price of coke flour was 540 RMB/ton; the price of small and medium-sized materials in Hami market was 490 RMB/ton. The prices of small and medium-sized materials in Changji market were 850-700 RMB/ton, coke flour 240 RMB/ton, and mixed materials 195-280 RMB/ton; the prices of small and medium-sized materials in Changji market were 850 RMB/ton, and coke flour 350 RMB/ton, all of which were ex-factory prices in cash including tax; the prices of small and medium-sized materials in Tianjin Port were 840-900 RMB/ton, and coke flour 880 RMB/ton, all of which were port closing prices in cash including tax; the prices of small materials in Yumen market were 280-460 RMB/ton, coke flour price was 310-600 RMB/ton, coal powder price was 440-470 RMB/ton, and rice material semi-coke price was 345-360 RMB/ton, all of which were ex-factory prices in cash including tax.

Supply and Demand

The surge in the ferrosilicon market was largely driven by policy and sentiment. While manufacturers' profits continued to recover, they were experiencing increased production, low inventory levels, and strong sentiment. However, demand had limited upward pressure on prices. Production continued to increase. Since July, medium-sized enterprises in Ningxia that were previously undergoing maintenance have gradually resumed production, including those that previously only had one submerged arc furnace in operation. The pace of resumption of production in Qinghai and Gansu had been slower, with some companies considering accepting orders first and restarting furnaces in early August. Ferrosilicon enterprises in Shaanxi that underwent maintenance were concentrated in the Fugu area. Some factories were undergoing power plant upgrades, while others were hesitant to resume production due to the 75% price increase. As of July 24, the national operating rate (capacity utilization) was 33.33%, a 0.88% increase from the previous week. Average daily output was 14,615 tons, a 2.31% increase, or 330 tons, from the previous week.

Steel Bidding Situation

In August, a Guangdong steel mill offered ferrosilicon at 6,150 RMB/ton for a 400-ton quantity; a Yunnan steel mill offered 5,970 RMB/ton for a 400-ton quantity. Both prices were paid in cash, including tax, at the factory. Downstream suppliers were reluctant to stockpile ferrosilicon and were cautious in purchasing. Exports remained relatively subdued, with 72-grade ferrosilicon FOB prices ranging from $1,000 to $1,020/ton. 75-grade ferrosilicon prices were around $1,030 to $1,060/ton.

Future outlook:

Overall, the supply side remained relatively loose due to continued increases in production, while demand had yet to see a significant breakthrough. It is generally expected that ferrosilicon spot prices will decline in August.

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