Price trend:

Last week, possibly driven by certain market news, ferrosilicon futures prices turned positive, with prices rising on the trading floor. Some factories showed increased willingness to deliver goods on the exchange, leading to a reduction in company inventories. Coupled with stable raw material prices, production costs remained relatively high, and news of production cuts and shutdowns at some factories further reduced supply. As of December 19, most industry players were not actively lowering prices to sell, and some were even holding back on sales to support prices. However, as the cold winter season deepened and various market activities gradually winded down, overall demand may be negatively impacted again, putting downward pressure on the overall market. Some industry players were adopting a more cautious approach, and a wait-and-see attitude was increasing. According to SunSirs' commodity market analysis system, on December 19th, the market price of ferrosilicon (grade: FeSi75~B; particle size/mm: natural lump) in Ningxia region was 5,150-5,250 RMB/ton, with an average market price of 5,221 RMB/ton, a 0.47% increase compared to Monday.

Influencing factors

Raw Material Semi-coke Market: Last week, the national semi-coke market remained stable, with most companies maintaining their prices. However, some companies slightly lowered prices due to inventory pressure. As of December 19th, the price of medium-sized semi-coke in the Shenmu market was 830-850 RMB/ton, small-sized semi-coke was 780-810 RMB/ton, and coke fines were 510-590 RMB/ton; in the Fugu market, medium-sized semi-coke was 830-880 RMB/ton, small-sized semi-coke was 780-900 RMB/ton, and coke fines were 530-650 RMB/ton. Overall, the raw material market was experiencing little fluctuation, having minimal impact on semi-coke prices. However, increased inventory in the semi-coke market itself, coupled with the continued phenomenon of selling at lower prices to reduce inventory, indicates an overall weak and consolidating market.

Production Status: Most ferrosilicon producers were operating normally, although a few manufacturers temporarily suspended production for maintenance or switched to producing other products. Manufacturers had limited inventory, and the market supply was relatively average.

Downstream Situation: Downstream steel mills were mainly purchasing based on orders, with some still making purchases to meet immediate needs, but there were no large orders. Therefore, it appears that pre-holiday stockpiling has not yet occurred. Market traders were also cautiously observing the situation, and the overall atmosphere was acceptable, with market demand at an average level. Northern steel mills were mostly pricing around 5,660 RMB/ton (including tax and delivery to the factory, payable by acceptance), while southern steel mills were mostly pricing around 5,700 RMB/ton (including tax and delivery to the factory, payable by acceptance).

Market Outlook

Overall, the recent strength in both coking coal and coke boosted the finished steel market.  Coupled with an improving macroeconomic environment, market sentiment was strengthening. After rising for several days last week, the ferrosilicon futures market saw a rebound, providing some market confidence. Manufacturers' inventories were not significant, and spot market resources were limited. Traders may face some inventory pressure. Due to limited orders from downstream companies, traders may offer discounts to reduce inventory pressure before the Lunar New Year.  Therefore, domestic ferrosilicon spot prices are expected to fluctuate.

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