Chinese common alloys market strengthens again

Over the past week the Chinese domestic common alloys market strengthened again, following the softening trend observed in the previous week. In the manganese alloy market, due to the serious drought and electricity shortage in the southwestern region, market players may face a problem of tight supplies of manganese alloys in the near future and some producers have already suspended sales in anticipation of further price increases. Meanwhile, improved demand and also a slight price increase have been observed in the domestic ferrosilicon market.

In the past week, the prices of manganese alloys have stopped their decline in China's domestic market. Market quotations of FeMn65Si17 have been at RMB 7,900-8,300/mt ($1,158-1,202/mt) in the south of China, marking an increase of RMB 50-100/mt ($7-15/mt) week on week; at the same time, the mainstream price of FeMn65 in the south has remained unchanged at RMB 7,900-8,200/mt ($1,158-1,202/mt), while export offers of FeMn65Si17 have remained at $1,450/mt FOB.

Due to the drought in southwestern region of China, most manganese alloy producers in Guangxi, Guizhou and Yunnan have already stopped production. In the region in question, production has been cut by 80 percent while the producers still operating are producing at high cost levels. Currently, the cost of electricity is relatively high at RMB 0.55/kWh, thus placing great cost pressure on the manganese alloy producers, whose quotations are at unchanged levels. Looking at the current situation, tight availability may be observed in the domestic manganese alloys market, which is also why the producers are not in any rush to sell their materials.

Over the past week the ex-factory price of ferrosilicon (75 percent) was RMB 6,000-6,100/mt ($880-894) in northwestern China, up RMB 50/mt ($7/mt) compared with the previous week. In addition, export quotations of domestic ferrosilicon (75 percent) have been at $1,280/mt FOB.

During the week in question, China's ferrosilicon market has observed a slight improvement with more deals being concluded in some regions. In the Ningxia market, due to the rise in electricity charges, the local ferrosilicon producers have also raised their sales prices slightly. Meanwhile, with the improvement of demand in the international markets, in particular in Japan and South Korea, the domestic ferrosilicon market has also received support from the export market. In addition, with the significant price increase seen in the Chinese steel market, the ferrosilicon producers have been gradually gaining in confidence. Based on the current market situation, it is expected that the mainstream prices of domestic ferrosilicon alloys will continue their upward trend in the coming period.