Regardless low output, an overheated market of Ferrosilicon has sent the expected increase of the prices on shaky ground amid the COVID-19 pandemic.
In the beginning of Q4 2020, the traded volumes of Ferrosilicon in the global market have dropped reflecting the unwillingness of the consumers to pay more for the alloys. Besides, the perspectives of the steel market performance in Q1 2021 were not clear enough, at that time. This tendency has also been observed in the activity of the Si product buyers on Metalshub marketplace. In December, however, steel plants have increased purchases rapidly being sold out with the finished product until April amid very positive expectations of Q1 2021 recovery. Although, despite higher offer prices, quarterly and annual contracts for Ferrosilicon with the end-users have been concluded on Metalshub with notable discounts.
COVID-19 and prices of Ferrosilicon
During the first months of COVID-19, the Ferrosilicon market was mainly impacted by a low supply. Especially the lockdowns in China contributed to a low output of the alloy. In turn, causing the market prices for Ferrosilicon peak in March and April.
Metalshub average weighted weekly price for FeSi, EUR per t, FCA Europe:
The prices went down when China came out of its lockdowns and the supply of the materials began flowing from the country once again. However, the regained supply from China doesn't make up for the supply shortage the industry is now facing.
A lack of Ferrosilicon in the market
Not only has one of the largest European producers of Ferrosilicon, Ferroglobe, shut down production on its plants in France, it has also reduced its production of standard-grade Ferrosilicon at its operations in northern Spain. Whether Ferroglobe intends to restart the production in the nearest future is still unknown.
Similarly, the supply of Ferrosilicon from Brazil has been put to a halt for a while in November, as one of the company’s plants was out of production. At the same time, COVID-19 has affected the freight rates, which have been increasing tremendously over the year. These higher rates have reduced Europe’s supply of the alloy from Malaysia, as the freight prices push Malaysian shipped Ferrosilicon up. A price level that is too high to be able to compete with the current European prices.
With many long-term contracts being concluded at this time of year, we’ve recently seen the price of Ferrosilicon naturally increase. However, despite an overheated market, there are no indications that the prices for Ferrosilicon stand to increase further, living up to the growth that was previously expected.
Short-lived factors impact Ferrosilicon prices
Nevertheless, many factors have in the past months affected the pricing of the alloy. These changes make it difficult to foresee market developments and stay competitive.
To keep up with the market, it’s important to have access to a price index that accounts for these events without you having to research them separately. Metalshub’s Price Discovery Service provides weekly updated price indices on different ferroalloys based on real data from market transactions.
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