NEW YORK Ferrosilicon prices have strengthened as rising replacement costs from China, one of the largest suppliers to the U.S. market, have crimped shipments from that country and led to some tightness in the domestic market.
Prices are now between 89 and 91 cents per pound, up from 85 to 90 cents previously, with significant inter-trade business reported at the upper end of the range in the past week.
Sources said that prices might need to rise even further to make Chinese material competitive again.
"Hitting those numbers (current price levels), they (traders) cant get a replacement out of China. Now theyre out of material," one supplier source said.
"Prices in China are moving up due to tight supply until the Chinese New Year (in February)," a trader said. "Current f.o.b. levels are $1,360 to $1,390 per tonne (82 to 84 cents per pound), up $30 to $40 over the past two weeks."
Sources said that including logistics costs, this would put material in a domestic warehouse in the low- to mid-90-cent-per-pound range, at or even above current price levels. As a result, exports of the material from China, which in the past has been one of the largest sources for domestic traders, have dried up.
Only 200 tonnes of ferrosilicon made their way from the Asian nation to the United States in October compared with 3,169 tonnes in the same month a year earlier, according to the latest U.S. Customs figures. Chinese shipments in the first 10 months of last year totaled 31,944 tonnes, down 39.7 percent from 52,990 tonnes in the same period in 2011.
Sources were optimistic that the relatively tight supply and customers expected first-quarter restocking would lead prices to rise further.
"Im bullish on the first quarter. I see this thing running up to the mid-90s," the supplier source said.