European Ferroalloys Price Insights - September 2022

Despite still high electricity prices in Europe, ferroalloy prices in most segments continued to fall in September. The main reason for this is lower demand from consumers. Expectations of a seasonal surge in buying activity at the end of the summer holidays have yet to materialise.

Market Insights

According to worldsteel, steel output continues to decline in most regions of the world. Thus in EU countries steel output in August dropped by 13% YoY, in North America by 5.4%, and in Japan by 7.4%. Steel output in China stabilised at previous levels, while the CIS+Ukraine region continues to set records of a 22% YoY decrease. 

In August, Germany’s crude steel production continued to decline. The output fell by 2.3% to 2.9M mt YoY, according to German Steel Federation WV Stahl. The main reason for that was the decreased EAF production amid extremely high energy costs. In particular, EAF steel production dropped by 8.6% to 715,000 mt, whereas BOF remained at 2.1M mt level.

Industry in Europe, and the metals sector in particular, continues to be affected by global political and economic instability. The escalation of Russia's military aggression in Ukraine and the resulting energy crisis threaten to plunge the continent's economy into a prolonged recession in 2023.

Manganese and Silicon
  • Purchases by large consumers for the fourth quarter have provoked increased competition among suppliers and additional discounts. Weighted average FeSi price index on Metalshub collapses by 20% in September.

  • Despite a brief pullback in mid-September, spot electricity prices on the EU market are still twice as high as at the start of Q3. 

  • Failure of all four strands of the Nord Stream 1 and Nord Stream 2 pipelines in the North Sea could provoke increased speculation in the energy market, despite full gas storage capacity in the EU. 

  • In late September, a series of explosions was followed by the fire at one of the three furnaces of the Laudun facility, managed by Ferroglobe. The asset was stopped completely, and by now it is still unclear when the production can be restarted. 

  • The increase in FeSi offers on Metalshub indicates that the market for silicon alloys in Europe is somewhat oversupplied, which is preventing prices from rising. 

Noble and Chromium alloys
  • Towards the end of the month, increased buying activity and emptying of individual suppliers' warehouses helped to increase FeMo prices by 10%, as indicated by the Metalshub index.

  • Nickel price slump and extremely low demand from stainless steel producers lead to another collapse of chrome alloy prices in Europe.

  • Neither strikes in South Africa nor the ongoing isolation of Russian producers were able to support prices. 

  • In the short term, chrome and low-tonnage alloy suppliers in Europe will be under pressure from two countervailing factors. On the one hand, production costs will remain high, at least on the back of high energy prices and higher prices for other raw materials due to inflation. On the other hand, geopolitical instability will not be conducive to an increase in steel production and hence ferroalloy consumption. 

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