Price trend:

The ferrosilicon market in November exhibited a volatile pattern of "prices under pressure but limited declines." Price movements were constrained by two forces: strong support from the cost side, with semi-coke prices remaining stable due to winter coal demand, coupled with expectations of an upcoming increase in Ningxia's settlement electricity prices, narrowing manufacturers' losses and fostering a strong willingness to maintain prices; and supply-demand imbalance exerting downward pressure, with a market surplus of 40,000 tons in October. Although November's output decreased slightly by 0.77% month-on-month, the ample supply situation remained unchanged, and the futures market remained weak due to bearish sentiment. Notably, Hebei Iron & Steel's November tender price for 75B ferrosilicon was 5,680 RMB/ton, an increase of 20 RMB/ton from the previous round, becoming a short-term anchor for spot prices. According to the SunSirs commodity market analysis system, on November 27th, the market price of ferrosilicon (grade: FeSi75～B; particle size/mm: natural lumps) in Ningxia was 5,050-5,200 RMB/ton, with an average market price of 5,114 RMB/ton, a 2.16% increase from the beginning of the month.

Influencing Factors

Cost Situation: Seasonal Price Increases

Since the beginning of November, the price of lump coal has continued to strengthen, and the supply situation in major producing areas was tight, providing strong support for the price of semi-coke. Inventories at enterprises in major producing areas were generally low, and some semi-coke enterprises had suspended production for maintenance before the heating season. On November 27th, the price of medium-grade coal in Shenmu was 850-920 RMB/ton, the price of small-grade coal was 800-850 RMB/ton, and the price of coke powder was 560-630 RMB/ton, all ex-factory prices including tax and cash.

Demand situation: Steel demand was dragged down by the off-season, and non-steel demand is unlikely to make up for the shortfall

In November, ferrosilicon demand exhibited a divergent pattern characterized by "weak primary demand and supportive secondary demand." The contraction in demand from the steel industry was the core suppressive factor: national crude steel production continued its downward trend, with a year-on-year decrease of 12.1% in October (incomplete statistics). In November, the average daily pig iron output of steel mills nationwide fell to 2.3628 million tons, a decrease of 6,000 tons month-on-month. Steel mills primarily purchased only for immediate needs, and their willingness to replenish inventory was weak after the end of steel bidding in November; some companies even slightly lowered prices.

Non-steel demand remained relatively stable: the magnesium industry continued to increase production and reduce inventory, and the self-consumption rate of ferrosilicon in Shaanxi Province remained high, driving a recovery in related consumption. Weekly demand for ferrosilicon of the five major steel grades increased by 2.46% to 19,543 tons. However, this increase was insufficient to offset the decline in demand during the off-season for steel. Coupled with the fact that steel tenders in December have not yet fully started and retail transactions were sluggish, overall demand resilience was insufficient.

Inventory situation: Significant regional depletion, but overall pressure remained

November's ferrosilicon inventory showed a pattern of "total decrease but structural differentiation." (Incomplete statistics) As of November 24, the inventory of 60 independent enterprises nationwide fell to 73,050 tons, a significant decrease of 10.21% month-on-month, representing a reduction of 8,310 tons. Among them, the main producing area of Inner Mongolia saw an inventory decrease of 7,000 tons, accounting for 84.2% of the total reduction. The inventory reduction was mainly due to two factors: first, some enterprises in Qinghai and Ningxia underwent maintenance due to losses, resulting in a 4.38% decrease in weekly output compared to the previous week; second, traders had low circulating inventory after previous destocking, and thus replenished their stocks to absorb some resources.

However, we need to be wary of the risks of "in-the-books destocking and hidden pressure": In mid-November, inventory briefly rebounded to 81,360 tons, a new high for the same period, indicating that the end-user's digestion capacity was limited; and the inventory in production areas such as Sichuan remained at zero, with insufficient room for subsequent restocking. If demand declines further, inventory pressure may accumulate again.

Import and export situation: Exports declined during the off-season, and overseas demand is unlikely to improve

Ferrosilicon exports continued the weak trend of October in November. Although full-month data is not yet available, October exports fell by more than 36% both month-on-month and year-on-year. Cumulative exports from January to October totaled 317,300 tons, a year-on-year decrease of 8.85%, confirming the drag effect of the off-season for consumption in Japan and South Korea in the fourth quarter. Weak overseas demand was mainly affected by two factors: first, the global economic recovery slowed, leading to fewer overseas orders for the steel industry; second, the cooling of expectations for a Federal Reserve interest rate cut and a stronger dollar suppressed demand for commodity imports, resulting in insufficient momentum for a short-term export recovery. On the import side, it is expected to remain at the low level of 10,000 tons in October, with negligible impact on domestic supply.

Ferrosilicon Market Outlook in December

The ferrosilicon market will enter a phase of reduced supply and demand in December, with prices likely to fluctuate between 5,050 and 5,300 RMB/ton.

Supply-side contraction may intensify: manufacturers were experiencing significant losses, new production capacity in Gansu has been postponed until next year, and output in November and December is expected to decline year-on-year. Coupled with the growing discussion on winter environmental protection-related production restrictions, production cuts and shutdowns may increase in Qinghai, Ningxia and other regions.

Demand remains under contractionary pressure: the policy of reducing crude steel production continues, the steel industry has entered the traditional off-season, and demand is likely to continue to decline; exports are unlikely to improve due to the off-season for overseas consumption, but the start of steel bidding in December may bring phased restocking demand, forming short-term support.

Costs and policies are key variables: rising costs of semi-coke and electricity will push up the cost center of ferrosilicon, providing strong support; if the "anti-involution" policy is further strengthened, it may improve market confidence.

Overall, it is unlikely that the price of ferrosilicon will break out of its fluctuation range in December. Attention should be paid to changes in the operating rate of manufacturers and the pricing pace of steel bidding.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.