2021 ferroalloys price overview

2021 was characterised by a rise in ferroalloy prices. This was due to a recovery in demand from end-users and several factors preventing a corresponding increase in supply.

Market Insights

The European ferroalloys market did not see any significant price fluctuations in December, as most market players had already curtailed their trading activity in the run-up to the holidays and were focused on completing all the formalities of signing long-term supply agreements for the first quarter or 2022 as a whole. 

Nevertheless, during 2021 the price dynamics on the regional market, especially in some product segments, was characterized by several fluctuations, both in the direction of unprecedented increase in quotations and their decrease. Overall, however, 2021 was characterised by a rise in ferroalloy prices. This was due to a recovery in demand from end-users and several factors preventing a corresponding increase in supply. 

Looking at the demand for ferroalloys in Europe, it is worth looking at the dynamics of steelmaking volumes. Worldsteel data for November will be published on December 22; however, an analysis of the January-October data shows that EU steel output rose 18.4% to 128,400 mt this year after falling 12% in 2020 amid the first waves of the pandemic. EU steel output in 2021 is expected to cumulatively exceed pre-crisis figures for 2019. Thus, the steel industry has not only recovered from the fall but also moved into a growth phase. Whether growth levels will continue in 2022 is still an open question, and experts and analysts have diverging opinions. 

The structure of supply and price dynamics in each of the ferroalloy market segments will be considered separately. 

Manganese and Silicon

In December, trading activity in the European ferrosilicon spot market was minimal, resulting in a price decline of up to 10%. During the year, particularly in the second half of the year, ferrosilicon prices in Europe increased rapidly, reaching a local peak by November. Metalshub's weighted average ferrosilicon price index reached a high of €4,196/t FCA by 19 November, almost three times the January 2021 low. The FeSi price index is published weekly by Metalshub. More than 68,000 mt of ferrosilicon were listed on the marketplace in 2021, an increase of 30% compared to 2020.

The main factor contributing to the FeSi price increase in Europe in the outgoing year was the shortage of supply on the spot market. In turn, in Q1 and Q2 the deficit was due to a sharp increase in the cost of shipping overseas products (primarily from Asia), as well as the actual stoppage of alloy production at plants in Malaysia amid a coronavirus outbreak in the country. In the second half of the year, logistical issues were compounded by unprecedented increases in energy costs, leading to several rounds of silicon alloy production shutdowns at Ferroglobe in Spain and OFZ in Slovakia. 

Quotations for high-carbon ferromanganese in Europe also rose during the year. Metalshub's weighted average price index peaked by 12 November at €1,755/t FCA, against a January low of €898/t FCA. The weekly index was based on 41,000 mt of HC FeMn volumes listed on the Metalshub marketplace in 2021. 

The maximum price for SiMn was recorded in November at €1,731/t FCA, against €930/t FCA in January. Almost 79,000 mt of silicomanganese were listed on Metalshub during the year. 

The increase in the cost of manganese alloys in Europe during the year was driven by higher transportation costs and lower alloy output in Malaysia, periodic production cuts at plants in Ukraine (both countries together cover more than 60% of European imports), and the introduction of a 15% HC FeMn export duty in Russia from August. 

A rapid price rally was also observed on the European market for manganese metal in 2021. As more than 90% of EU consumption of the product comes from China, the transportation component of the final price played a decisive role in the market, at least during the first half of the year. In September and October, the largest manganese metal plant in the world stopped production and spot sales in China and the high cost and long delivery time of new shipments deprived European traders of any flexibility in pricing. The weighted average price index for manganese metal flakes on Metalshub reached a high of €7,040/t FCA by 5 November, thus quadrupling since January. Almost 20,000 mt of manganese metal flakes were listed on Metalshub during the year, double last year's level.

Noble and Chromium alloys

European ferromolybdenum prices peaked twice in 2021: the weighted average FeMo price index on Metalshub was $47.82/kg Mo FCA at the end of June and $48.78/kg Mo FCA at the end of August. By the end of December, the index had rolled back to $43.11/kg Mo FCA, which is still almost twice as high as the lows at the beginning of the year. The weekly Metalshub index is based on 7,800 mt of ferromolybdenum listed on the trading platform in 2021 (up 3 times YoY). 

The increase in FeMo prices during the year was, as in other segments, driven by higher transportation costs from China and South Korea, as well as several strikes at mining operations in Latin America, the world's main molybdenum supplier. 

This year, Metalshub handled over 2,000 mt of ferrovanadium requests, 25% more than the year before. The weighted average FeV price index on the marketplace increased during the year, peaking in mid-July at $40.22/kg V FCA amid civil unrest in South Africa and the announcement of force majeure on supplies by the largest producer. 

The strong (5-10% weekly) increase in European LC FeCr prices started in August after the introduction of a 15% export duty in the EAEU countries (including Russia and Kazakhstan) and is now continuing. Metalshub's weighted average LC FeCr price index peaked at $3.63/lb Cr FCA on December 3, compared with a low of $1.67/lb Cr FCA in early January. In addition to trade barriers, the cost of chrome alloys globally is rising amid rising input costs driven by rising energy costs. 

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Written by Alex Andreev alexandr.andreev@metals-hub.com

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