SHANGHAI Ferrosilicon smelters in China have been forced to lower operating rates due to reduced purchasing by steel mills in recent months, AMM sister publication Metal Bulletin has been told.
Operating rates in the Ningxia autonomous region, the countrys biggest production base, are at around 40 to 50 percent, market sources said.
"The current price from steel mills is very close to producers production cost or even lower for small smelters," according to one source at a smelter in Ningxia that shut two of its three furnaces over the past few months.
Hebei Iron & Steel Group Co. Ltd., the countrys largest steel mill, recently cut its August bid price for ferrosilicon with a 72-percent silicon metal content to 6,100 yuan ($987) per tonne, down 50 yuan ($8.15) from July. The price includes delivery and payment in the form of an acceptance draft.
"The price is too low to accept. If it finally sets at this level, more smelters will consider shutting down," the Ningxia source added.
Large producers might also reduce output if the price pressure continues. "If steel mills continue to cut prices, I think we may consider cutting production," an executive from Erdos Metallurgy Group Co. Ltd. said, adding that its smelters are currently running around full capacity.
A version of this article was first published in AMM sister publication Metal Bulletin.