SHANGHAI Chinas largest ferrosilicon producer, Erdos Metallurgy Group Co. Ltd., expects local ferrosilicon prices to remain firm until the Chinese New Year in February.
"Tight supply and improved demand from the steel sector are the major support for the market before the Chinese New Year," said Qi Biao, general manager of the Ordos City-based companys sales group, Erdos Xijin Kuangye Co. Ltd.
Chinese ferrosilicon prices have strenghtened as higher prices from steel mills buoy sentiment.
"I think domestic prices could still see some upward room of around 100 to 200 yuan ($16 to $32) per tonne," Qi told AMM sister publication Metal Bulletin on the sidelines of an industry conference in Hainan, China, over the weekend.
The average operating rate of local ferrosilicon smelters was around 50 percent this year due to an oversupplied market, Qi said, but steel mills ferrosilicon inventories are low.
Steelmakers raised prices recently after an uptick in demand. Domestic ferrosilicon is changing hands at 6,200 to 6,250 yuan ($994 to $1,002) per tonne, up 350 to 400 yuan ($56 to $64) from early November.
Mainstream export deals are likely to hit $1,350 to $1,360 per tonne f.o.b., around 1.9 percent higher than the current level of $1,330.
Erdos is expected to produce 700,000 to 720,000 tonnes of ferrosilicon in 2012, up around 11 percent from 640,000 tonnes last year.
A version of this article was first published by AMM sister publication Metal Bulletin.