NEW YORK Silicomanganese
market participants say Felman Production LLCs decision
to idle one of its furnaces could tighten up supply enough for
prices to increase, with all eyes focusing on the outcome of a
reported tender from steelmaker Nucor Corp.
Felman Production said that it
will start planned maintenance work one furnace at a time on
each of the three furnaces at its New Haven, W.Va., plant until
September, at which point it will leave one furnace idle if
economic conditions have not improved (
amm.com, May 20).
The company attributed the move
to "the decline in silicomanganese prices over the past several
months combined with rising manufacturing costs, such as
Silicomanganese traders said the
idling could tighten up supply to the extent that prices are
pushed higher. The material is currently trading in a range of
53 to 57 cents per pound, having dropped steadily from a range
of 73 to 79 cents in March 2012.
"This could be a good catalyst
to see prices start moving positively," one trader said.
"Felman is widely recognized as the leader in terms of market
share, so the fact they cut back a furnace sends a pretty
strong message. It tells me that they really are suffering on
costs, which is what weve been saying for months about
prices not being sustainable at these levels.
"After being the market leader
in volume, now theyre showing leadership in constraint.
It should tighten things up," he said. "Even if on the demand
side it stays flat, the message is clear that prices need to
"It may be a bullish thing for
the marketplace," a second trader said. "I think theres
not a whole lot of volume there, so it may make things a bit
tighter. So it could be a good thing."
Meanwhile, Charlotte, N.C.-based
Nucor is reported to have submitted a "request for quote"
seeking up to 3,300 tons of silicomanganese in the third
quarter for its plants in Darlington, S.C., and Marion, Ohio,
with results of the tender expected within days.
Sources told AMM that
the tender has the potential to substantially influence
free-market pricing for silicomanganese, much as a similar
tender from Nucor did in March (
amm.com, March 8).
"They could use that as an
opportunity to test the market," the second trader said.
Sources told AMM that
Nucor also has a tender in the market for ferrosilicon,
although reports on the quantity have varied.
Nucor could not be reached for