European Ferroalloys Price Insights - June 2022
In June, global and European ferroalloy markets were dominated by downward price trends, with only some product segments seeing price increases. The market lull was mainly due to low demand. Rising energy prices, a foggy outlook for finished product consumption and an even more foggy outlook for the impact of Russia's ongoing military aggression in Ukraine on Europe's economic health all contributed to the region's business climate dropping to its lowest levels in 13 years.
EU carbon steel production fell by 7% year-on-year in May, with Germany the most notable (down 11.5%). In the first five months, it fell by 4.3% and 4.8%, respectively.
It should be noted that the markets of ferroalloys and metals for which Ukraine and Russia are the largest suppliers to Europe (ferrosilicon, silicomanganese, ferrochrome, nickel) are still in short supply and have difficulties with alternative supplies, but due to extremely sluggish demand the suppliers failed to develop into a stable trend the speculative jump in prices that took place in March-April.
Objectively, we can assume that the lull in the European market will continue until the end of the summer season due to holidays.
Manganese and Silicon
Ferrosilicon prices in Europe fluctuated marginally during June. In the first half of the month, suppliers tried to speculate on higher prices in China, but by the end of the month were forced to give in again. According to some reports, importers of Brazilian, Indian, Egyptian and Middle Eastern alloys overestimated the effect of supply disruptions from Ukraine, and brought in a significant volume of products in previous months, which are now lying in warehouses. The weighted average FeSi price index on Metalshub fell by 3.7% in June.
Slightly more sensitive to the lack of new shipments of Ukrainian ferroalloys was the silicomanganese market in Europe. The weighted average price index for SiMn on Metalshub rose 3%. However, we do not rule out that the introduction of export duties on steel in India in the near future will lead to a surplus of ferroalloys on the domestic market and its reorientation towards export. With the summer lull, this could have a negative impact on silicomanganese prices.
The European manganese metal market did not show notable price fluctuations. The weighted average price index for manganese metal flakes on Metalshub rose by 4%, reflecting a corresponding increase in global manganese ore prices in June.
Nickel, Noble and Chromium alloys
The imposition of sanctions against Vladimir Potanin, the largest beneficiary of Norilsk Nickel, immediately saw nickel prices on the LME rise by 6% in the last week of June. However, during the month the decline price trend prevailed. The main risk of significant market shake-up is that after UK, the sanctions pressure could be strengthened by the EU and other countries.
The European stainless steel market performed well in early 2022. Orders from regional producers were growing dynamically, but in April the market was already oversupplied and producers' bookings for Q3 had deteriorated significantly.
A similar situation is occurring in the market for alloys used in the production of various grades of stainless steel. Metalshub's stainless steel alloying baskets indices declined by 12-14% in May vs. April. Market leaders Aperam and Outokumpu also slashed their alloy surcharges by €400-600/mt, or 12-15% MoM.
This explains the drop in prices for most ferroalloys used in stainless steel production in June. The weighted average ferromolybdenum price index on Metalshub fell by more than 4% in the past month to its lowest monthly level since the beginning of the year. Molybdenum oxide prices also fell in a similar vein.
In the chrome alloy markets, trends were directly opposite. Metalshub's LC FeCr price index fell by 12.5% in June as the expected deficit on the back of anti-Russian sanctions turned out to be less than significant. At the same time, HC FeCr prices soared by 12% on higher prices in China and a deficit in Europe, as indicated by the Metashub weighted average price index.
The price of ferrotungsten and ferrovanadium, as indicated by the Metalshub indices, did not change significantly. The ferrotitanium price index collapsed by 29% as the market continues to return to previous price levels after a speculative price spike on the back of Russian aggression in Ukraine and the imposition of harsh sanctions against Russia.
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