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|Price Of Chinese Ferro-Silicon In This Week Has Risen Further To US$800 / Ton FOB|
|= The Price In China Has Also Risen In Spite Of Scarcity, With View To Rise To Level Of US$1,000 / Ton|
The price of Chinese ferro-silicon offered for export in the beginning of this week has risen further. Chinese shippers are now offering ferro-silicon at US$800 per ton FOB and a phenomenon, having risen steeply the price in spite of a shortage of actual cargoes, has become more clear.|
It is supposed that the investigations for environmental pollution and the regulations for operations applied severely by the Central Government of China have caused to decrease considerably the production of ferro-silicon in China and to rise steeply its price. According to an information from the person concerned in production of ferro-silicon in Inner Mongolia, who came back to Japan from Inner Mongolia in last week, only 1/3 of the existing facilities are being operated at present. The investigations to check air pollution implemented by the Central Government of China have concentrated on the plants located in Inner Mongolia Aut. Region, Ningxia Hui Aut. Region and Qinghai Province. The countermeasures for environmental pollution adopted by the administrative authorities concerned are to cut short substantially length of chimney installed at plant for ferro-silicon and to work dust collector, and the plant is unable to produce ferro-silicon without working of dust collector because of sooty smoke.
Originally, there are many plants in China, which operate in night time without working of dust collector in order to save fee of electric power. Therefore, it seems that, as the countermeasures for this operation in night time, an emergent treatment to shorten length of chimney for sooty smoke has been enforced. The production of ferro-silicon in Inner Mongolia Aut. Region and Ningxia Hui Aut. Region, so-called as the New Silicon Land, is decreasing and this decline of the production has influenced on the supply situation of ferro-silicon in China and, accordingly, Chinese steel mills have been currently busy to secure ferro-silicon.
While Erdos in Inner Mongolia once said boastfully that they produce newly 400,000 tons per annum of ferro-silicon, this new production of ferro-silicon has delayed to materialize in comparison with that as initially scheduled. The existing twenty 12.5 MVA electric furnaces are operating but eight large electric furnaces ( with transformer capacity of 25 MVA per furnace ), as a model of electric furnace in China, are anticipated to operate on a substantial scale from the end August of 2006 or afterwards with a delay of two months. Also, Erdos has taken a cautious attitude in starting up of the operations as these new large electric furnaces are the first case for Erdos. Apart from Erdos, only four 25 MVA electric furnaces have been constructed at other plants in China and, therefore, it is natural that Erdos has taken a cautious attitude in operating large electric furnaces because of a risk for this operation.
The supply of electric power in Huanan area has been based on hydroelectric power generation and, under the current situation, it is easy to secure electric power for a rainy season. It is expected that a steep rise of price for ferro-silicon will cause to increase production of this ferro-alloy, but it is being known from a search by trading company that the supply situation of ferro-silicon in this area is unexpectedly tight. In relation to the existing electric furnaces which are being operated to produce silicon metal and silico-manganese, it is necessary to take 2 - 3 months to convert these electric furnaces for production of ferro-silicon, even when price of ferro-silicon has risen sharply. The price of Chinese ferro-silicon was on a level of US$630 - 650 per ton CIF Japan until the beginning of May, which was not payable for production cost, and this price level is still unable to follow quickly a steep rise of the price.
At present, the exportable price of Chinese silicon metal is in the range of US$950 - 970 per ton CIF Japan and, in view of the unit of electric power to be consumed for production of ferro-silicon, price of which has risen to US$800 per ton FOB, the production of ferro-silicon in China is overwhelmingly advantageous but a time-lag arises to convert electric furnace.
The phenomenon, having risen steeply price of ferro-silicon, has been seen not only the markets of Asia but also in the markets of Europe and the USA, in where price of ferro-silicon has already risen to a level of US$950 per ton delivered. Therefore, the steel mills concerned in Europe and the USA are now strongly interested in a potentiality of Chinese ferro-silicon, although China has been located in a long distance from Europe and the USA. The two US importers are now planning to transport ferro-silicon from China to the USA by means of arranging a 30,000 - 40,000 ton type vessel with full cargoes, which consist of 10,000 - 20,000 tons of ferro-silicon to be loaded at Tianjin port and many general merchandises to be loaded on upper deck of vessel, and contacting with shippers on this matter.
For a reference, according to the customs-statistics released in China, this country exported 106,000 tons in total of ferro-silicon in April of 2006, which remained as nearly unchanged from that in March but included 32,496 tons exported from China to European countries that shared 30% of the whole export in April and consisted of 4,186 tons for Belgium, 10,115 tons for Italy, 12,703 tons for Netherlands and 5,492 tons for Slovenia. Also, China exported 7,628 tons of ferro-silicon for the USA in April of 2006 ( 11,000 - 13,000 tons per month of ferro-silicon were exported from China to the USA in January - March quarter of 2006 ) and, accordingly, the total quantity of Chinese ferro-silicon exported to Europe and the USA in April had shared 40% of the whole export. The reason, why price of ferro-silicon in Europe has suddenly risen sharply from May, is due to a decrease of the exports from Norway and Ukraine but it is also said that another reason is the nondeliveries by Chinese shippers as the prices already contracted with European customers are low in comparison with those prevailed at present.
It seems that, owing to the fact that Japan and South Korea have been located in nearer places to China, these two countries are contradictorily late to secure ferro-silicon. China exported 24,900 tons of ferro-silicon for Japan in April of 2006, having had a considerable decrease of 32% compared with that in the previous month - March. A signal to rsie price of ferro-silicon was already seen in the USA from March but trading companies and steel mills in Japan have really felt this tight supply of ferro-silicon from the beginning of May. This delay of the purchases from China was due to a feeling of safety, which Japan will be able to purchase ferro-silicon from China by all means, but the matter in question is that the outstanding contracts concluded at Yen prices have been still left for cargoes to be shipped in June. Because of the problems which Chinese shippers have been performing nondeliveries or delaying their shipments, the supply of ferro-silicon in Japan has become an extreme tightness. Even at major steel companies in Japan, the accommodation of ferro-silicon between steel works has commenced.
The Kyushu Works of Nippon Steel held on the end of May a tender to purchase 3,000 tons of ferro-silicon and a result of this tender is now marked to see. According to an unconfirmed information, a little lower price than US$800 per ton CIF Japan has been awarded for this tender and the contracts have been dispersed with several lots. It is informed that the Central Government of China will raise the duty on export of ferro-silicon by 5% from July of this year and impose 10% on the export, and this information is giving a tension on price of Chinese ferro-silicon. However, it is not a wonder that some of Chinese producers rather choose to sell ferro-silicon in domestic market than the export including a risk of export duty.
|last modified : Mon 12 Jun, 2006 [10:13]|