European Ferroalloys Price Insights - March 2022

During March, Europe's ferroalloy markets continued to feel the negative effects of the war in Ukraine unleashed by Russia and the effect of EU and US sanctions imposed on Russian businesses.

Market Insights

The supply of Russian-made ferroalloys to Europe is in great doubt, and not only the departure of the world's largest transportation companies from Russia is to blame, but also the risk of reputational losses. Thus, despite the absence of a direct ban on Russian ferroalloy products, European buyers are wary of buying Russian ferrovanadium from Evraz, for example, one of whose co-owners fell under personal sanctions.

Shipments of manganese and silicon alloys from Ukraine, in turn, are complicated by the de facto blockade of the country's seaports and serious difficulties in land transportation of products to EU countries. Nevertheless, ferroalloy plants in Ukraine continue to operate in a stable mode, as far as the current situation allows.

In the medium term, the ferroalloy markets are likely to see a review and restructuring of supply chains and geography aimed at replacing Russian or Ukrainian products. Ferroalloys produced in Asian countries may become an alternative. 


Manganese and Silicon

An already significant shortage of FeSi on the European market, triggered by reduced production at Ferroglobe and OFZ plants, was exacerbated in March by the inability to supply from Ukraine. In turn, sellers of the Kazakh alloy are trying to find routes that would avoid transit through Russia. In turn, this will make delivery even more expensive. Meanwhile, the weighted average price index for ferrosilicon on Metalshub rose by 30% in March.

Similarly, the European silico-manganese market, which depends on Ukrainian alloy supplies by 30%, according to customs statistics. If the war in Ukraine drags on, European buyers will have to refocus on supplies from Malaysia and India, which will take time. During March, the weighted average price index for SiMn on Metalshub increased by 40%.

In contrast, manganese metal saw a rapid decline in price in March, triggered by a glut in the Chinese market due to extremely low demand. The Metalshub index for manganese metal flakes almost halved in March. Towards the end of the month, however, Chinese market participants began to report a gradual recovery in buying activity on the domestic market, which gives a chance for export quotations to rise in the near future as well.

 

Noble and Chromium Alloys

The force majeure at the Tikhvin ferroalloys plant (Russia) declared at the beginning of the month and a possible total ban on supplies from Russia in the new sanctions packages are fueling the European ferrochrome market. Also, Russia and Ukraine are not only ferroalloys’ but also finished and semi-finished stainless and chrome steel products suppliers. Therefore, Europe will need to produce more steel, which will consequently raise the demand for ferroalloys. In March, the weighted average price index for HC FeCr on Metalshub rose by 35% and the LC FeCr quotation rose by 25%.

 

One of the most sensitive to the sanctions against Russia was the market for ferrotitanium. Russian supplies accounted for the lion's share of total supply in Europe, and since the beginning of March the alloy on Metalshub has risen two and a half times in price on the back of the current situation. The ferrovanadium price index also saw an almost two-fold increase. After the introduction of personal sanctions against one of Evraz's owners, purchases of Russian products by trading companies declined, and the market began to churn due to possible shortages.

 

In the molybdenum product segment, speculation was minimal. The Russian-Ukrainian war is only marginally affecting this market (in terms of material supplied by the Armenian producer, which is owned by the Russian company). Nevertheless, rising maritime freight prices and the resulting higher transportation costs for Chinese and Korean FeMo led to a 12% increase in the weighted average Metalshub index for ferromolybdenum in the EU in March.

 

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