Ferro Alloy NEWS

Ferro alloys face pressure from “strong supply and weak demand”

Ferro alloys face pressure from “strong supply and weak demand”

Ferro alloys face pressure from “strong supply and weak demand”

Anyang Weiyuan Alloy provides professional Ferro alloys information, high-quality products, and excellent delivery services.

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Market Details

Ferro alloys market analysis


Recently, ferro alloys prices have continued to fluctuate, with both market supply and demand weak, and the market lacking drivers. On the one hand, the blast furnace has continued to suffer losses since the fourth quarter, the output of molten iron and the five major materials has dropped year-on-year, the willingness of downstream replenishment is low, and the number of days available for steel mills has dropped to a nearly six-year low;

 

On the other hand, alloy manufacturers in the main production areas have begun to reduce loads and shut down furnaces for maintenance and production due to cost inversions and energy consumption policies. However, the pressure on spot supply is still high, especially since the registration of manganese and silicon warehouse receipts has continued in the past month. It has climbed back to its high level at the beginning of last year.

 

In the past two weeks, cold wave and blizzard warnings have been issued in many places in the north. Road transportation in many places has been severely hampered, which has had a certain impact on the production, supply and transportation of alloys. There may be opportunities for supply and demand mismatch in the short term, but the price rebound is still subject to weak demand and high supply. Pressure, mainly pre-holiday oscillations, it is recommended that industrial enterprises treat it with the idea of ​​rebounding and preserving value.

 

On the supply side, from January to November this year, domestic ferrosilicon production totaled 5.05 million tons, a year-on-year decrease of 7.6%; silicon-manganese production was 9.65 million tons, a year-on-year increase of 21%.

The output of ferrosilicon and manganese-silicon is differentiated year-on-year, and the main reason is the fluctuation of raw materials such as coal power and manganese ore: electricity accounts for more than 50% of the cost of ferrosilicon, which is the largest raw material cost; the largest cost of manganese-silicon is manganese ore, accounting for 40%. Since the beginning of the year, the price of manganese ore has fallen by more than 10 yuan/ton, or 20%, far exceeding the decline in manganese and silicon spot prices. Therefore, manganese and silicon companies have considerable production profits, and their enthusiasm for starting operations has always been high.

 

Looking at ferrosilicon, the electricity price settled in production areas this year is generally strong and has not fallen back with the loose supply of coal. In particular, the electricity price in ferrosilicon production areas such as Ningxia and Shaanxi has increased by 1-4 cents compared with the beginning of the year, driving up the cost of ferrosilicon by 80-320 yuan. / ton, the profits of ferrosilicon companies dropped off a cliff, and they fell into losses again after the National Day. In order to reduce losses, companies could only shift peak hours or reduce production suspensions, so the annual output dropped significantly.Medium Carbon Ferromanganese

It is worth noting that this year, the proportion of ferrosilicon and manganese-silicon production in Inner Mongolia increased by 2% and 10% respectively compared with last year, and the trend of concentration of ferroalloy production capacity has gradually become clear.

From a policy perspective, since the dual control of energy consumption, the main ferroalloy production areas, led by Inner Mongolia and Ningxia, have continuously adjusted and optimized the industrial development level. There have been qualitative leaps in industry equipment and energy efficiency levels, green energy substitution, recycling, etc. The regional competitive advantage has been greatly improved. It is expected that the concentration of ferroalloy production capacity will continue to increase in the future, and energy efficiency and cost competition among enterprises will become more intense.

On the demand side, alloy consumption has dropped significantly year-on-year this year, especially after the Spring Festival, the traditional peak demand season for “gold, three, and silver”. However, steel consumption has continued to decline due to real estate drag.

In the first 10 months of this year, the consumption of ferrosilicon and manganese silicon decreased by 7.2% and increased by 1.3% respectively year-on-year. Crude steel consumption and exports were significantly dragged down year-on-year. In terms of crude steel, the output of hot metal and crude steel has continued to grow this year. However, the profit margin of the steel industry in the first three quarters was 0.27%, ranking third from the bottom among the 41 major industrial categories. Steel mills have always focused on reducing costs, increasing efficiency, and improving capital efficiency. Task.

From the perspective of production raw materials, compared with iron ore and bicarbonate, ferroalloy has lower production volume and proportion. The procurement pricing power and voice are always on the side of steel mills. The bargaining power of ferroalloy production companies is weak. Therefore, the alloy procurement at steel mills this year Consumption has shown a trend of falling volume and price, which is also the direct reason for the weakness of alloy prices. In terms of exports, ferrosilicon exports in the first 10 months of this year were 346,000 tons and silicomanganese exports were 44,000 tons, down 42.2% and 60% respectively year-on-year. Exports plummeted.

ferro alloys
Looking forward to 2024, domestic steel mills are still facing pressure to lose money and reduce production. It is expected that crude steel supply will still have room to fall, with output fluctuating around 1 billion tons. On the overseas side, according to the forecast report released by the World Steel Association, global steel demand will continue to grow by 1.9% in 2024. It is expected that steel demand in developed economies will recover slowly in 2024. If this optimistic expectation is extrapolated, global crude steel in 2024 Output and domestic ferroalloy exports are expected to stop falling and stabilize.

On the cost side, as of December 18, according to estimates, the cost of ferrosilicon in Ningxia is 6,770 yuan/ton, with a profit of -140 yuan/ton, the cost of silicon-manganese is 6,410 yuan/ton, and the profit is -290 yuan/ton; the cost of ferrosilicon in Inner Mongolia The cost is 6040 yuan/ton, and the profit is -510 yuan/ton.

The cost of silicomanganese is 6050 yuan/ton, and the profit is 100 yuan/ton. Through comparison, it can be seen that due to the low electricity costs of large industries in Inner Mongolia, ferroalloy production has an absolute advantage, which has also contributed to the main production capacity and output growth. In the future, the concentration of alloy production capacity will continue to move closer to Inner Mongolia.

Ferro alloys company products for sale


Anyang WeiYuan Alloy Co., Ltd was established in 2011. We specialize in producing various ferroalloys for steel making, including Ferro Silicon, Ferro Chromium, Silicon Carbide, Ferro Manganese, Metal silicon price Calcium Silicon Barium, Metallurgy Nodulant, Silicon Calcium Powder, carbon raiser, etc.

Advanced equipment and strict QC procedures ensure our products are of high quality.

Click to learn more about Weiyuan

 

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