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Market Trend of Import of Ferroalloy as of 31 July 2018
= Anticipation of price hike of EMM is enhanced in China =
In China, alteration of export procedures effective from August 1 was officially announced last week, but many of the shippers have yet to cope with this, and the shipment of the contract balance in August has a likelihood of being delayed. On the one hand, as to the electrolytic manganese metal (EMM), there is such a rumor in the market as the biggest producer will cut back on production furthermore, which makes an anticipation of a price hike stronger.

The market trend of import of ferroalloy as of 31 July 2018 is as follows.

<> Silicon Metal = The main price of 553 grade in the current Chinese domestic market is CNY11,600 - CNY11,700 per ton, and made a recovery to the same level as the end of June. There is a sign that the prices of 441 and 3303 grades also will make a recovery from a drop in the middle of July. The price of 2202 grade continues to remain flat from the end of June. The market participants see this price hike results from the possibility of a tight supply which came up to the surface because the products cannot be transported and the producers shut down the plant due to the heavy rainstorm in Sichuan (ranks third in the domestic production) which continued from the end of June. However, it seems that the production of aluminium alloy products gets reduced due to a serious concern about intensifying trade friction with USA and the consumption of silicon metal also gets reduced.

In the Japanese domestic market, the demand for silicon metal continues to be in a state of being weak for such reasons as (1) Entering into the period for curtailment in production in the summer season, (2) Possibility of non-delivery occurs due to altered export procedures in China and (3) Impact to the production by the rainstorm in western Japan has yet to be made clear. However, partly due to a price hike in China, the price turns upward slightly from the middle of the month, and the contract price is in a state of being down by around US$20 from the end of June.

<> Ferro-silicon = In Chinese domestic market, as a result of the decreased production by steel mills overlapped with the recovered production in the main production area for ferro-silicon, the price of ferro-silicon with Si being 72% shows a downward trend. On the one hand, the price of the product with Si being 75% also begins to drop together, but its price drop range is a bit small, which is because the supply of good-quality silica stone is still tight, and the it will take time to resolve this matter.

As to the export, many of the producers think to maintain the offer price, but Chinese yuan is becoming weaker against U.S. dollar, and the contract price is showing a tapering down trend. But, the price difference is big because of sharp fluctuation in the foreign exchange. Besides, many of the traders set an offer price at a higher level by being cautious about the re-exchange.

In the Japanese domestic market, the customer's consumption is seasonally weak, and the buying motivation is at a low level. The contract price of Chinese ferro-silicon is down by around US$70 from the end of June.

As to Russian ferro-silicon, the spot goods are still tight, but the offer for the spot goods for August/September shipments was submitted and the contract for this was made. The price is down by around US$40 - US$65 from the end of June (August shipment) by being pushed by the price downward trend in the Asian market.

As to Malaysian ferro-silicon, the producers (OM Sarawak and Pertama Ferroalloys) focus on the production of long-term contracts, and no contract for spot goods meant for Japan as August/September shipments was made.

Cheap products via Vietnam and directly from mainland China continue to be distributed in small amounts.

<> Silico Manganese = The price in the Chinese domestic market dropped temporarily in expectation of production recovery, but again rose because of delayed recovery and the increased retail price of imported manganese ore. The current price of Inner Mongolian 6517 product is CNY8,150 - CNY8,300 per ton, up by CNY0 - CNY50 from the end of June. It becomes one of the reasons for a price hike that there are the traders which are positive in securing the spot products since the futures products will reach the delivery date in September. Besides, no contract meant for Japan was made this time, either.

As to the price of Indian silico manganese, many of the producers are eager to raise an offer price as the price of manganese ore meant for China submitted by the overseas manganese mine hovers at a high level. However, the demands in Asian and European regions are weak, and there is no big change in the contract price.

The current contract price in the Japanese domestic market is up by US$20 - US$30 from the end of June.

As to Malaysian silico manganese, OM Sarawak and Pertama Ferroalloys Sdn. Bhd. are producing, and the price seems to be at the same level as Indian products.

<> High-carbon Ferro-chrome (including charge chrome) = The situation of no trading of spot goods meant for Japan being made is still going on.

The price in the Chinese domestic market turned downward from the latter half of July, and the current price is down by around CNY150 per ton from the end of June. This is because of an anticipation of a price fall for such reasons as (1) Price of high-carbon ferro-chrome for July/September shipments meant for Europe and Japan dropped even though slightly, (2) Demand from steel mills in China is weak due to the production curtailment period in the summer season and (3) Production in the main production areas is expected to make a recovery from now onward.

<> Low-carbon Ferro-chrome = As to the spot goods, albeit the supply of the domestic product continues to be tight, the price per lb was down by Cents 2 - 4 from the end of June because not only is the demand weak due to production curtailment in the summer season, but also the price gets weakened in the entire Asian region.

On the one hand, the price in the Chinese domestic market began to drop in the latter half of July, which is because the inspection by the Ministry of Ecology and Environment of China (MEE) which was implemented in Inner Mongolia as a main production area came to an end, and not only is the production making a recovery even though gradually, but also the demand gets weakened due to production curtailment in the summer season.

<> Molybdenum = The prices in the Chinese domestic market have shown a rising momentum since the latter half of July in the order of molybdenum concentrates, molybdenum oxide and ferro-molybdenum. The price rose sharply since the product price turned upward thanks to rising prices of imported raw materials and many of the steel mills floated a tender. At the present moment, the price of ferro-molybdenum is up by around 20% from the end of June.

The price of molybdenum in the European market has rebounded in advance of happening in China, and the current prices of molybdenum oxide and ferro-molybdenum were up by around 8.3% and up by around 4.0% respectively from the end of June. Since the labor-management negotiations at Escondia copper mine in Chile finished unsuccessful, the market participants think this will affect the supply of molybdenum as well.

On the one hand, the price of molybdenum in LME continues remaining unchanged from the end of March.

<> Ferro-vanadium = The price of ferro-vanadium in Europe which continued to show an upward trend from May had a short break in the last week of July. However, the price is one level higher than the middle of July, and in a state of being up by around 12.9% from the end of June. Besides, the price seems to begin to drop back in some areas.

On the one hand, both prices of vanadium pentoxide and ferro-vanadium have stopped rising also in China, and shown a slight drop in some areas, which is because although the production volume has yet to make a recovery by a large margin, the demand becomes weak in the summer season. The price of ferro-vanadium in the major production areas (Panzhihua and Chengde) is up by 5.8% from the end of June.

<> Manganese Metal = In the Chinese domestic market, the production curtailment in the main production areas prevailed, and the price again shows a rising momentum contrary to the anticipation in the market. The main price as of July 31 in the Chinese domestic market is CNY19,200 - CNY19,300 per ton, up by CNY4,700 from the end of June and the export FOB price is US$2,940 - US$2,990, up by US$680 - US$710 ditto. The production in Ningxia as a biggest production area, Hunan (ranks second in the domestic production) and Guizhou (ranks fourth ditto) was cut and some of the producers stopped offering, which made the supply instability expanded. Many of the producers insist a high price, but since many of the customers look to this price hike with some optimism as a temporary one, the cases where the contracts are made are a few, and a price hike is sporadic.

In the Japanese domestic market, many of the customers are taking a wait-and-see stance due to a sharp increase in the price in China in addition to the production curtailment period. Besides, the cheap products which were kept as an inventory within the country appeared in the tender although the lot was small, which surprises the participants in the tender. The current contract price hovers at a high level by being affected by a price hike in China and the producer's stopping an offer, and is up by US$700 - US$720 from the end of June.

For reference, the next "Market Trend of Import of Ferroalloy as of 31 July 2018" will be posted on our report dated August 20 (WEB version in the evening of August 17) because of summer holidays.
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last modified : Tue 07 Aug, 2018 [10:23]
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