There has been a continuing decline in ferroalloys production in the United States during the past decade, even as overall global output has increased, according to the U.S. Geological Survey (USGS).
The North American decline can be attributed to a number of factors, including the shift of ferroalloys production to ore-producing countries, the USGS said. This trend was clearly observed by the 1980s, but U.S. production began to decrease as early as 1970 and imports subsequently rose.
Increased global competition appears to be the primary reason for the decline of the U.S. ferroalloys industry. As a result, North American purchasers of ferroalloys are much more at the mercy of the global market, which is moving dynamically in 2012.
Demand has been spreading to the ferrosilicon and ferromanganese markets as buyers try to buy silicon and manganese units in alternative forms, one trader said.
But another trader said that while the market was relatively tight, he didnt think the situation had worsened significantly recently. There is definitely tightness and I dont see the price going down anytime soon. But I dont think its as oversold as people have said. I wish it was, he said.
Chinas molybdenum output could fall this year as a weaker steel market keeps prices low, according to an executive at Jinduicheng Molybdenum Group Mining Corp. (JDC Molybdenum), Chinas largest producer. Miners will inevitably face losses or low profits with the increased resource taxes and other costs rising, Nick Cao, vice general manager of JDC Molybdenum Marketing Co., told delegates at an Asian ferroalloys conference in Hong Kong earlier this year. Chinas domestic prices failed to move notably higher even after the government increased resource taxes on mining earlier this year, he said. We expect production this year will drop or growth will slow down, Cao said. The Chinese market is full of uncertainties, so it is hard to say how much (molybdenum output) will decrease. We estimate that Chinas demand growth will also decrease this year, in line with the lackluster downstream market.