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Market Trend of Import of Ferroalloy as of 15 April 2019
= Chinese market is confused after value added tax is lowered =
The Government of China lowered the value added tax on the manufacturing industries from 16% to 13% from April 1. Some the market participants expected the prices of commodities would be lowered in a single uniform way, but the movement became complicated as the result of the fact such multiple factors were connected one another as an upward trend on prices and a production adjustment based on supply and demand balance and commencement of application of an electricity rate for a full-water season.

The market trend of import of ferroalloy as of 15 April 2019 is as follows.

<> Silicon Metal = The main price of 553 grade in the current Chinese domestic market is CNY10,900 to CNY11,100 per ton, down by CNY200 to CNY300 from the end of March. The price of 441 grade is also down by CNY100 to CNY200 ditto, but the price of 3303 grade was down by CNY300 to CNY400 ditto, and the price of 2202 grade remained unchanged, which means the price cut range varies according to the grades, which is thought to be the result of the fact such factors for a price cut affected the respective production areas as an anticipation of a fall in expectation of a decrease in the value added tax and an increase in the supply volume and an application of an electricity rate for a full-water seas. The prices of 553, 441 and 3303 grades meant for export also come down in a reflection of domestic prices.

The purchase of spot products by the customers in Japan was shifted to the products to be delivered after the continuous holidays in May were over. The price dropped slightly by being affected by a price drop in China, and is down by US$30 to US$45 from the end of March.

<> Ferro-silicon = Major steel mills in China submitted a purchase price for April delivery in the first week, but many of the ferro-silicon producers do not seem to have made a bid because they were dissatisfied with the prices submitted. The meeting of ferro-silicon commissioners of Iron Ferroalloy Institute of China was held in Ordos, Inner Mongolia on April 8, and the neccessity of production adjustment was asked at the time of exchanging opinions of producers after the meeting was over. For this reason, a price rise has begun to be seen sporadically in the market in expectation of a decreased supply in the future, but the feeling of tightness in the whole market is not much, and the price has yet to have a big movement.

The demand in the Japanese domestic market is firm, and the contract is focused on May shipment. There are still variations among the contract prices, which however hover at the same level as the latter half of March, and the current spot price remains almost unchanged from the end of March. If a decreased value added tax is considered, the price is raised substantially.

The supply of Russian ferro-silicon spot goods is still tight, but an extremely small number of contracts were made for shipments to the spot market from May to June. The price remained unchanged from the prior shipment.

The producers of Malaysian ferro-silicon (OM Sarawak and Pertama Ferroalloys) focus on the production for long-term contracts and Europe, and as to the spot goods for shipments during May to June, there was a contract concluded at the same price as Chinese product.

As to cheap products via Vietnam and directly from mainland China, the distribution seems to continue to be at a low level.

<> Silicon Manganese = The price of silicon manganese in the Chinese domestic market has continued to be confused since entering April. While the forecast about decreased supply in Inner Mongolia and Ningxia and scarce ferruginous manganese ore as raw materials created an anticipation of a rise, such factors for a price cut occurred as lowered value added tax and submission of a lowered ore price from overseas manganese mine, which resulted in the up-and-down mood in the market. The current actual sales price in the market is down by CNY150 per ton from the end of March.

In India, the producers have got enthusiastic about raising the offer price because not only has the decreased production of silicon manganese for export proceeded, but also the price of imported manganese ore has risen, but the contract price in the former half of April also stayed in a sate of being slightly up. The ore price for May shipment submitted by overseas manganese mines for the past several days had a strong sense of stagnation, and the Indian silico manganese seems to have a situation of a higher price becoming severe for a while.

The contract price in Japan was up by around US$10 from the end of March by being affected by raised offer prices of Indian and Vietnamese products.

As to Malaysian silicon manganese, OM Sarawak and Pertama Ferroalloys Sdn. Bhd. are producing, and Pertama Ferroalloys now focuses on the production of JIS Standard 0 and 1. The price of OM Sarawak's product seems to be at the same level as Indian products.

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

The price in China stopped rising in April, and a price drop was sporadically seen in some areas last week. The market participants provide such reasons for a price drop as (1) Demand for stainless steel mills in China is weak, (2) Ferroalloy producers in the southern area are increasing production of high-carbon ferro-chrome, (3) Retail price of chrome ore dropped and (4) Application of an electricity rate for a full-water season will start. The stock for distribution is still ample, and some of the producers which have ample stocks for distribution and worry about a price collapse in the future have a high likelihood of having started to sell at a low price for the purpose of selling at a profit.

<> Low-carbon Ferro-chrome = Since the long-term contract meant for the period from April to June just finished, the trade of spot goods is thin. The current price remained unchanged from the end of March.

On the one hand, the price of low-carbon ferro-chrome in China also began to drop from the middle of April, which was because albeit there was such a factor for a price rise as production curtailment in Inner Mongolia, there was an impression that the production cost was down thanks to lowered value added tax and ore price. The current price is in a state of being down by around 1% from the end of March.

<> Molybdenum = Steel mills in China began to procure products for April delivery in the last week of March, and this had a condition in consideration of lowered value added tax, but the price is the same as March, which substantially means a price hike. However, the price dropped slightly since entering April by being pushed by a price declining mood in the market, and the current price of ferro-molybdenum is down by around CNY1,000 per ton.

The price in the European market has dropped slightly even since entering April. The price of molybdenum oxide was down by 3.2% to 3.9% from the end of March and the one of ferro-molybdenum was down by 1.8% ditto.

<> Ferro-vanadium = The price of ferro-vanadium in the Chinese domestic market dropped back in the middle of March, and the current price is down by around 21% from the end of March. The contract made in the European market is scarce and an anticipation of a price drop is strong because of a sharp price drop and a customer's wait-and-see stance.

After the price of ferro-vanadium in Europe dropped sharply in the latter half of March, it continued to drop, and the current price is in a state of being down around 20.5% from the end of March. Some of the market participants feel optimistic about the price while saying that the price will stop dropping in a short period, but the price has already dropped to the same level as January 2018, and shown no sign of stopping dropping.

The price meant for Japan also dropped by being affected by a sharp drop in Europe and a Chinese cheap product. The current price is in a state of being down by 18.0% to 19.0% from the end of March.

<> Manganese Metal = The main price in the Chinese domestic market as of April 15 is CNY13,000 to CNY13,200 per ton (unchanged from the end of March) and the export FOB price is US$1,935 to US$1,955 (up by US$5 ditto). The export price dropped slightly in early April, and the price for domestic consumption dropped to CNY12,900 to CNY13,100, but turned upward on April 15 in the beginning of the week, and made a recovery to the same level as the end of March. There are such factors for a price cut in the market as (1) Impression the production cost will be reduced thanks to lowered value added tax, (2) Purchases by stainless steel mills calmed down and (3) Decreased electricity rate as a result of commencement of application of an electricity rate for a full-water season in the southern area, whereas there are also such factors for a price hike as (1) Producers are reluctant to sell at a cheap price, (2) Production of 200-series product by stainless steel mill is strong and (3) Major producer in Ningxia stops offering, which leads to the lower market price becoming severe. Besides, the producer in Xinjiang Uyghur Autonomous Region reduced production temporarily due to some troubles, which is thought to be resulted in a price hike at the moment.

The downward pressure on export prices is not strong partly because the price meant for a major customer in South Korea for April delivery fixed at the end of March is US$1,910, slightly down by US$20 from the one for March delivery.

The buying motivation of the customers in Japan was low from the end of March to the former half of April in order to avoid discharging and receiving the cargoes during the golden week. However, the purchase of the products to be delivered after the continuous holidays are over is anticipated to occur in the latter half of April, and the multiple tenders seem to be scheduled to be floated this week and next week. The current contract price is in a state of remaining almost unchanged from the end of March.

For reference, as the final day of April for Market Trend of Import of Ferroalloy is a holiday, the market trend as of April 25 will be posted on our report dated April 26 (WEB Version: in the evening of April 25).
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last modified : Mon 22 Apr, 2019 [10:44]
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