SHANGHAI, China Chinese ferrosilicon export market activity has increased significantly due to a drop in the amount of material being smuggled out of the country, market sources said.
Smugglers are more cautious about shipping material via Vietnam to avoid a 25-percent export tax due to stringent checks by Chinese customs officials, a source at Erdos Metallurgy Group Co. Ltd. (EMG) told AMM sister publication Metal Bulletin.
"A lot of (South) Korean buyers, who usually purchase material from Vietnam, have resumed trade with us over the past month," he said.
Chinas exports to South Korea rose 36.5 percent to 9,099 tonnes in August vs. July, customs data show.
Output cuts in western Chinas ferrosilicon hub of Ningxia, along with reduced profits from smuggled goods, also curtailed illegal trade, a Gansu province source said.
"The average operating rate in the area is around only 50 to 60 percent at the moment, so few people are now willing to trade smuggled cargoes after the prices of regular cargoes have fallen over the past few months," the Gansu source said.
Export prices for illegal ferrosilicon are at $1,290 to $1,300 per tonne, market sources said, close to the current spot market level of $1,330 to $1,350 per tonne f.o.b. China.