SHANGHAI Erdos Metallurgy
Group Co. Ltd. (EMG), Chinas largest ferrosilicon
producer, has purchased a 65-percent stake in Qinghai Wutong
(Group) Industry Co. Ltd., increasing its capacity by 250,000
tonnes per year.
"It cost over 400 million yuan
($64.3 million) to buy the stake in Wutong," an EMG executive,
who declined to be named, told AMM sister publication
Metal Bulletin. "Acquisitions and mergers will become
the main trend in industry integration, and Wutong is just the
first step of our strategy."
The company plans to acquire
other ferrosilicon enterprises with a certain scale, the
company executive added, declining to provide additional
Qinghai Wutong, one of the
countrys major ferrosilicon producers, couldnt be
reached for comment.
EMGs existing ferrosilicon
capacity stands at 720,000 tonnes per year, a figure that it
expects to increase to 1 million tonnes annually by the end of
this year or early 2014 after four new furnaces come
EMGs capacity following
the purchase will be 1.25 million tonnes per year, of which
250,000 tonnes will be from Qinghai Wutong.
Ferrosilicon prices in the
domestic spot market have been weak this month after steel
mills cut their purchase prices.
Spot prices fell by 100 yuan to
6,300 to 6,350 yuan ($1,013 to $1,021) per tonne March 15 and
are expected to fall further on sluggish demand.
Given poor margins, producers and traders said they
couldnt cut their export offers and instead are focusing
their business in the local market. Mainstream export offers
were in a range of $1,430 to $1,450 per tonne f.o.b. China as
of March 15, unchanged for the past month.
A version of this article was first published by AMM sister
publication Metal Bulletin.