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Market Trend of Import of Ferroalloy as of 31 October 2017
= Future in China is unclear due to regulation on production effective from November =
(General Overview)

The 19th National Congress of the Communist Party of China finished on October 24, but the supply and demand from now onward has become more unclear because the production and construction work in Beijing, Hebei and its vicinity are supposed to be regulated from November 15 to March 15 next year. Besides, there are conflicting reports about the commencement of introduction of environmental tax which was announced at the end of last year, which exerts traction on a sense of uncertainty about supply and demand. The transition of prices in the Chinese domestic market can't be left unsupervised from November to next Chinese New Year.

The market trend of import of ferroalloy as of 31 October 2017 is as follows.

<> Silicon Metal = The main price of 553 grade in the current Chinese domestic market is CNY12,600 - CNY12,700 per ton, up by CNY400 from the end of September. During October, the price of silicon metal went up in the middle of the month because the silica stone mines ceased operation due to the regulation before Chinese Communist Party Congress, but turned downward before the end of the month. However, as mentioned above, the price still stays at a higher price level than the one at the end of September. The price of other grade of 441 was up by CNY300 - CNY400 from the end of September, the one of 3303 up by CNY200 ditto, but the one of 2202 remained unchanged during October.

As to the future transition of prices, the market participants see the contract price will continue to stay at the current level because there are multiple factors for a price hike such as an increase in the electricity rate and the price of electrode materials (needle coke), and the producers also strongly want to raise the product price, but as many of the customers refrain form purchasing by taking a wait-and-see attitude, the contract price is thought to continue not to go up for the time being.

In the Japanese domestic market, the trading is thin, and the contract price of spot goods of 553 grade remained at the same level as that in the middle of October.

<> Ferro-silicon = In the Chinese domestic market, major and midsize producers in 4 northwest provinces as a main producing area (Inner Mongolia, Ningxia Hui, Qinghai and Gansu) have continued production adjustment through implementing maintenance work. What's more, the supply volume has been reduced because the supply of electricity becomes tight, and the price of ferro-silicon stays at a gradually rising trend at the moment when the demand for steel mills and magnesium metal is weak. As of October 31, the price of Inner Mongolian products with Si being 75% is CNY6,500 - CNY6,700 per ton, up by CNY300 - CNY500 from the end of September and the one with Si being 72% is CNY6,300 - CNY6,500 per ton, up by CNY500 - CNY700 ditto. The offer price for export is also up owing to an increased domestic price. From now onward, the focus will be on the market trend because not only are there such factors for a price fall as the regulation on steel production will be enforced in Hebei and its vicinity and the producers and traders will have realization sales toward the end of the year, but also there are such factors for a price hike as the prices of electrode materials and coke will hover at a high level.

In the Japanese domestic market, the price of Chinese regularly-exported products rebounded from a price fall in the former half of October, and the contract price of spot goods made a recovery to the same level as the end of September.

As to Russian ferro-silicon, the supply of spot goods is still tight, and the price for December shipment is up by US$10 - US$30 from the end of September.

The price of Malaysian ferro-silicon also went up slightly by being pushed by a mood for a price hike in the Japanese domestic market, and returned to the almost same level as the end of September.

As to the cheap products via Vietnam or from the mainland China, the contracts for large lots are not many in the Japanese domestic market.

<> Silico Manganese = In the Chinese domestic market, the price continues to decline gradually from late September. As to the price of imported manganese ore, the price at which the mining company sells the ore to the import trader in China is going up, but the retail price in China continues coming down. Albeit the prices of other raw materials like electrode material and coke are rising, the price continues falling in the whole domestic area because of strong price downward pressure from steel mills in China. For reference, the situation of almost no contract having been made for export to Japan is going on.

As to Indian silico manganese, the offer price began to drop contrary to the price of imported manganese ore going up. Many of the producers were positive about increasing the offer price in the middle of October, but the producers' selling motivation became strong at the end of the month, and the price crashed as the cheap offer price began to be submitted. The main price is around the US$1,200 range, and the high offer price exceeding US$1,300 can't be seen.

The contract price of Indian silico manganese in the Japanese domestic market is down by US$60 from the end of September.

As to Malaysian silico manganese, OM Sarawak and Pertama Ferroalloys Sdn. Bhd. are producing, and OM Sarawak reported the average production volume per furnace in the period from July to September was 100 tons of silico manganese per day. Both companies are scheduled to have a tied shipment meant for Japan in October and November. The price in the Japanese domestic market is at the same level as Indian products.

<> High-carbon Ferro-chrome (including charge chrome) = The contract price of high-carbon ferro-chrome meant for Japan and the benchmark price of South African charge chrome meant for Europe for the period from October to December are drastically up by US Cents 29 from the prior period. The situation of no trading of spot goods being made is still going on.

On the one hand, the price of domestic products continues declining in China. This is because, imported high-carbon ferro-chrome and chrome ore maintain a high price, but the demand from Chinese stainless steel mills is weak while the ferroalloy producers have a firm operation, which leads to a state of oversupply.

<> Low-carbon Ferro-chrome = The trading of spot goods is still thin. The price has no movement and maintains unchanged from the end of September.

<> Molybdenum = The price of molybdenum continues falling in the Chinese domestic market. This is because the future demand for steel is judged to be weak. The price is down by around 2% from the end of September. The price of molybdenum concentrates also fell in the latter half of October, but rebounded slightly at the end of last week.

In the European market, the prices of molybdenum oxide and ferro-molybdenum which showed a downward trend stopped declining, and turned upward slightly at the end of the month. The price of ferro-molybdenum is in a state of being down by around 4% from the end of September. However, the price in LME continues to be flat.

<> Manganese Metal = The price of manganese metal in the Chinese domestic market began to drop at the same time when the National Congress of the Communist Party of China was over. The current main price per ton is CNY10,900 - CNY11,000, up from the end of September, but down by CNY500 from the maximum level in October. Many of the market participants forecast the oversupply will occur by a recovery of production in the southern area whereas the demand is weak, and the customers and traders with a sense of an anticipation of a price fall refrain from purchasing, which exert traction on a drop in the price of products. At the moment, the inspection by the Department of Environmental Protection has been being made in Guiyang, Guizhou (ranks fourth in the domestic production), but there is no specific information about the decreased production like a shut-down of a plant with regard to manganese metal.

The export FOB price shows a declining trend with a small range since the major producer in Ningxia Hui curbs the offer for export.

The trading in the Japanese domestic market continues to be thin, and many of the customers are taking a wait-and-see attitude while having a sense of an anticipation of a price fall due to the trend in the Chinese domestic market which again began to fall in price. Many of these customers expect to conclude a contract at a cheapest price by the end of the year, but the trading firms are on alert against the occurrence of troubles like non-delivery.

The current contract price is down to the same level at the end of September or less than that by the portion increased in the former half of October being balanced out by a price drop. The price difference according to the purchase sources is still in a state of being big.

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last modified : Wed 08 Nov, 2017 [10:07]
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