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Rapid recovery of steel markets boosts prices of bulk ferroalloys

The first half of 2021 saw a rapid recovery in steelmaking globally, without exception, after a collapse in 2020 amid a global pandemic. The rate of recovery surpassed even the boldest forecasts by experts.

Market Insights

In turn, steelmaking raw materials were also becoming more expensive at an unprecedented rate, at times the highest since 2008. The market of bulk (manganese and silicon) ferroalloys was not left out of the general trend. 

According to worldsteel, global carbon crude steel production in January-May 2021 stood at 837.5 million tonnes, 14.5% above the same period in 2020. Double-digit growth rates were recorded not only in the world leader in steel - China (473 million tonnes, up 14%)but also in the regions which suffered the most significant economic losses during the acute phase of the COVID-19 pandemic. Thus, EU countries produced more than 64 million tonnes of steel, up 15% YoY, while in the USA output grew by almost 11% to 34.8 million tonnes, in Brazil - by 21% to 14.9 million tonnes, in Germany - by 13.6% to 17 million tonnes. 

Growth in steelmaking also led to a surge in demand for all types of steelmaking raw materials, pushing up their prices in the first half of 2021. In mid-May, for example, iron ore prices in the global market, driven by record GDP growth and steelmaking in China, jumped 22%, surpassing the previous record reached in recent weeks before the collapse of steel markets in June 2008.

A similar trend was seen in the ferroalloys market, including in the bulk alloys segment (FeSi, HC FeMn, SiMn), which are the most widely used in the production of all types and grades of steel. Metalshub, a leading digital marketplace for ferroalloys and metals trading, noted in its price indices, based on real transactions taking place on the platform, that ferrosilicon prices in Europe rose 34% since January, silicomanganese rose 57% and ferromanganese rose 32%. In addition to strong demand, the growth was driven by the policies of some producers, who held back material and fuelled price increases, as well as the Suez Canal blockade, which delayed shipments of SiMn and FeSi imports from Malaysia and triggered an increase in ocean freight rates. 

Metalshub's new aggregated bulk ferroalloys basket price index in Europe rose by 40% between January and June, reaching €1,476 per tonne. It should be noted that by the beginning of Q3 the growth rate of ferroalloys prices in Europe slowed down, primarily due to the start of the holiday period and the traditional decline in ferroalloys consumption by steelmakers. Bulk ferroalloys prices on the European market are expected to stabilise in the coming weeks, or even bounce back slightly. 

About the Metalshub Price Index.

The Metalshub price indices are solely based on real transactions, bids and offers from the digital Metalshub platform, which is a fundamental shift in price reporting. The information is collected automatically without any journalistic work, e.g. telephone calls to market participants. This methodology minimises the risk of price manipulation and ensures a more robust picture of real market prices.

The Metalshub bulk ferroalloys basket index is now available for free. Sign up now to view.  

Written by Alex Andreev alexandr.andreev@metals-hub.com

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