SHANGHAI, China Around 15
percent of ferrosilicon production capacity at Chinas
biggest producer has been closed this month, and more output
may be cut in September due to the weak market environment.
"All of these furnaces were shut
early this month and are undergoing maintenance now. So far, we
have not set a restart date. It will depend on the market," an
official from Erdos Metallurgy Group (EMG) told AMM
sister publication Metal Bulletin. About 9,000 tonnes
of ferrosilicon production will be lost every month during the
shutdown, he added.
A source close to the company
said EMG was planning to cut another 30 percent of capacity
next month, but company officials refused to comment.
Chinese ferrosilicon prices
dropped to 5,900 to 6,000 yuan ($928 to $944) per tonne
Tuesday, down 50 yuan ($8) from last Friday to the lowest level
since 2010. The f.o.b. market remained quiet, with prices
unchanged in a range of $1,350 to $1,370 per tonne.
Most small and medium-sized
ferrosilicon businesses have already ceased production due to
the relentless decline in prices over the past year or so,
industry sources said.
"Major producers have started to
cut production in response to the simple economic facts," said
a source at an Inner Mongolia producer, which has already shut
down more than half of its furnaces and has almost suspended
its export business on low prices and demand. "We still receive
some bids from our old customers, but the bids are too low to
accept," she added.
Other big producers in major
production hubs like Gansu, Qinghai and Ningxia also have
trimmed output to reduce losses, according to sources.
Following the cuts by mainstream
producers, Chinas ferrosilicon production dropped to
394,512 tonnes last month, down 12 percent from June although
still 2.5 percent higher than a year earlier.
Some market participants believe that the reduced supply
could prop up prices in the fourth quarter. "I feel that prices
could stop falling in the fourth quarter, but its still
hard to say when they could rally," a smelter source in Ningxia