European Ferroalloys Price Insights - February 2022

The European ferroalloys market saw mixed pricing trends in February 2022. Silicon, manganese and chrome alloys were mostly increasing, while molybdenum was decreasing.

Market Insights

The European ferroalloys market saw mixed pricing trends in February 2022. Silicon, manganese and chrome alloys were mostly increasing, while molybdenum was decreasing.

Global carbon steel output in January fell 6% YoY to 155M mt, according to worldsteel data released today. The production went down in almost all key regions, being depressed by seasonal factors and remaining global uncertainty.

China remains the main driver of steel output decline amid environmental restrictions before Olympics. Plus, energy prices in the country remain high while logistics facilities for imported raw materials supply are still limited. Chinese companies have cut steel output by 11% YoY. Remarkable that 2 month ago the pace of decrease was twice higher. 

Steel production in the EU decreased by almost 7% YoY. Particularly, German steelmakers produced 3.26 M mt last month, down 1.4% YoY which the German steel federation attributed to “the pandemic and the sharp rise in energy costs.” 

No one dares to make predictions about the development of the situation in the near future at present. On February 24, Russia launched a full-scale military aggression against Ukraine. Within days, the EU, the US and other countries imposed unprecedented sanctions on Russia, its banking, financial system and industry. By the end of the month, the Russian economy was effectively isolated from the global economy, casting doubt on further supplies of metals and energy from Russia to the global market, including Europe.

At the same time, massive shelling of Ukraine's military and civilian infrastructure, as well as a humanitarian crisis, significantly hampered the country's steel industry and shipments to the EU.


Manganese and Silicon

European FeSi prices rose moderately in January, amid continued shortages of material with forward delivery, as well as lower production at plants in Europe due to high raw material costs. The average ferrosilicon price index on Metalshub rose by 4%.

Ferromanganese on Metalshub was up 14% and the SiMn price index was up 10%.

Note that bulk alloy markets in the EU are heavily dependent on FeSi and SiMn supplies from Ukraine, so the current war between Russia and Ukraine could lead to even larger shortages and higher ferroalloy prices in the coming months. Furthermore, it remains to be seen whether sales of Russian HC FeMn to the EU and FeSi to the UK are possible in principle, amid unprecedentedly harsh sanctions and the de facto isolation of payments between Russia and the EU.

Alternative suppliers to Europe could be plants in Malaysia and India, as well as FeSi supplies from MENA countries.

The manganese metal market was generally stable in January, with the Metalshub index even recording a 5% pullback in the monthly average quote. However, a rise in prices on the back of reduced production in China cannot be ruled out in the near future.


Noble and Chromium alloys

The situation around Russia could hurt the chrome alloys market in the EU. Russian-made products have a large market share in the region. In addition, a number of European and Swiss trading companies trading in Russian and Kazakh products will also be unable to operate amid the sanctions. Alternatives are Turkish, Albanian, South African and Indian alloys. In February, however, Metalshub's FeCr price indexes did not fluctuate significantly.

The ferrotitanium market was the fastest hit by the latest developments. The weighted average price index for February was unchanged, but on the first working day since the start of the war in Ukraine, the alloy quotations on Metalshub rose by 50% at once. Russia is the largest supplier of alloy to Europe.

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Written by Alex Andreev

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