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Global silicon: Prices diverge by region

Mar 20, 2017 | 12:17 PM | Christopher Kavanagh

Tags  ferrosilicon prices, ferrosilicon, China, trading, futures prices, Chris Kavanagh

NEW YORK — Ferrosilicon prices moved up in China on March 17, boosted by rising futures prices, as the U.S. market softened and prices in Europe held for the third week running.

AMM sister publication Metal Bulletin’s price quotation for domestic Chinese ferrosilicon rose to 5,600 to 5,800 yuan ($811 to $840) per tonne in warehouse China, up from 5,200 to 5,300 yuan per tonne on March 10.

Metal Bulletin’s assessment for ferrosilicon exported from China rose to $1,100 to $1,170 per tonne f.o.b. China, having previously held at $1,000 to $1,070 per tonne for two weeks.

The ferrosilicon futures price on Zhengzhou Commodity Exchange climbed throughout the week and reached its highest level since August 2014 on Friday.

Major smelters in China had not offered during the week ended March 10, but returned to the market on March 16 with higher offers.

One large ferrosilicon producer raised its offer by as much as 20 percent from two weeks earlier.

Smaller smelters followed, leaving most offers in the 5,800- to 6,000-yuan-per-tonne range, but no concluded deals were reported to Metal Bulletin.

Sources in China noted the lack of actual transactions but said that the domestic operating rate has been low, capping producer stocks.

“Smelters lifted their offers yesterday. The rise is larger than we expected and while no fresh deals can be heard for the time being, the price will definitely move up,” a trader in Beijing told Metal Bulletin.

One trader in Ningxia was not prepared to buy at today’s offer levels.

“The smelters’ offers are too high,” he said. “I don’t have any intention of buying, I am just waiting to see how mills will respond to this.”

Most mills have completed purchasing for March and may start to buy volumes for April within the next week or so, sources told Metal Bulletin.

Competitive U.S. supplier offers 
In the United States, the exact opposite occurred, as suppliers offered more competitively to place volumes amid second-quarter negotiations.

Spot ferrosilicon prices slipped to 77 to 80 cents per pound in-warehouse Pittsburgh, according to AMM’s latest assessment. That price was down slightly on the low end from 78 to 80 cents per pound previously.

While spot market activity has been lackluster, mills and suppliers have been engaged in second-quarter negotiations for long-term contracts.

“Prices have been getting a little more competitive as we close in on the second quarter,” a supplier source said. “People get nervous that if they don’t move (stock) before the second quarter, they are going to be stuck with the material.”

Cheaper material has been bound for the U.S. in recent weeks while overseas prices were weakening. This has gradually pushed U.S. prices down from highs of 80 to 84 cents per pound earlier in the year.

“There was a buying opportunity where prices came off in Asia, where material in China and Malaysia was available for attractive enough prices for traders to bring over material,” a second supplier source said.

“Prices have bumped back up out of China, and it has sealed off some of the buying opportunities that had emerged for traders,” the source noted.

Other U.S. supplier sources pointed out that recent price increases overseas have begun to close off the cheaper avenues for replacement material, as overseas producers target regions where prices are higher.

“Ferrosilicon is seeing signs of life both around the world and here,” a third U.S. supplier source said, noting stronger markets elsewhere.

“Brazilian and Malaysian ferrosilicon will be now heading to Europe, not the U.S., until prices here become more attractive,” the source added.

As a result, market participants anticipate an end to downward pricing pressure in the U.S.

“I think that there is still some cheap material in the market, but limited quantities,” a fourth supplier source told AMM. “The fact prices are going back up overseas should keep this market from falling out too much further.”

European prices flat

European ferrosilicon prices assessed on March 17 held for the third consecutive week at €1,120 to €1,200 ($1,202 to $1,288) per tonne delivered, amid thin trading.

Consumers have been able to secure deals towards the low end of the trading range and even below, offsetting efforts by traders to push prices higher, one trader in Europe told Metal Bulletin.

“We see an uptrend in traders’ pricing, but on the customer side prices are still low. I hope to see the European market influenced by the Chinese market,” the trader said.

Rena Gu, Singapore, and Janie Davies, London contributed to this article.

Chris Kavanagh

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