European Ferroalloys Price Insights - October 2022

European ferroalloy markets saw mixed trends in October. In a number of segments prices continued to fall due to weak demand in a highly competitive environment, but on the contrary, some positions rose in price.

Market Insights

It should be noted that the main factor, on which ferroalloys suppliers have relied in recent months in their reluctance to take prices down, seems to be rapidly losing its relevance - the high cost of energy resources and the resulting increase in production costs. In Germany, for example, spot electricity prices collapsed from the August peaks of €700/MWh to €106/MWh by the end of October. Electricity markets in Italy, Spain, France, and the UK behaved similarly. The cost of natural gas in the EU also collapsed almost threefold since August, amid an abnormally warm spring and the fullness of major storage facilities. 

Meanwhile, the consuming industry continues to stagnate. Global carbon steel output rose by just under 4% YoY in September to 151.7 mln tonnes, according to worldsteel. The main driver was China, where steel output rose by 17.6% to 87 mln tonnes for the first time in several months of steady decline. However, it is too early to say that the Chinese steel market is recovering its uptrend - the increase in September can be explained by production in storage ahead of the long holiday season in October. Elsewhere in the world, steel production continued to decline on the back of rising input costs and macroeconomic instability. In the EU the figure fell by almost 17%, to 10.7 mln tonnes (in particular in Germany - by 15.4%, to 2.8 mln tonnes), in North America by 7.6%, South America by 9.6% and the CIS+Ukraine by almost 22%.

Against this background, as well as ongoing geopolitical tensions and macroeconomic instability, there is little chance of any significant price fluctuations in the metals and ferroalloys market in the coming months.

Manganese and Silicon
  • Large customers were able to secure additional discounts from FeSi suppliers during purchases with delivery in October-January.

  • Despite lower electricity prices, ferrosilicon producers in Europe are barely covering production costs. Some are still forced to keep their furnaces switched off.

  • Ukrainian ferroalloy producers may face 25% higher electricity prices, promising to halt production since November.

  • In 2022, apparent steel consumption is expected to see its third annual recession over the last four years as a result of quarterly drops forecasted also for the third and fourth quarters of 2022, according to Eurofer. 

  • Apparent steel consumption is set to decrease also in 2023, albeit at a lower rate.

Noble and Chromium alloys
  • The ferromolybdenum market in Europe has maintained the upward price trajectory it set back in September. With Chinese market activity recovering from the holidays, speculation has only intensified in the EU as well. The weighted average FeMo price index on Metalshub rose by 26%.

  • Under pressure from weak demand and oversupply, including Russian material, which consumers are extremely reluctant to take because of possible sanctions and reputational risks, the FeTi price index on Metalshub fell by 44%.

  • Nickel and chrome quotations declined as European stainless steel output fell further. Metalshub price indices for the respective materials retreated 5-20% in October.

  • The European Q4 benchmark price for FeCr “charge” has been settled at $1.49/lb Cr, a 17.2% decrease QoQ.

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