Significant increase observed in Chinese ferrosilicon market

Over the past week the Chinese domestic manganese alloy market has continued to see tightness of supplies in the southwestern region, resulting in a continuous price increase in the market. Meanwhile, general confusion regarding price levels has been observed in the domestic ferrosilicon market, which has registered a significant increase during the past week.

In the past week, the prices of manganese alloys have continued their upward trend in China's domestic market. Market quotations of FeMn65Si17 have been at RMB 8,400-8,550/mt ($1,232-1,254/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 increased slightly to RMB 8,300-8,400/mt ($1,211-1,232/mt), while export offers of FeMn65Si17 have remained at $1,500-1,550/mt FOB.

While China's manganese alloys market has continued its upward march during the week in question, a relatively stronger growth has been observed in the quotations of northern mills. Currently in the northern region, due to tight supplies of spot materials, manganese alloys producers in Inner Mongolia and Shanxi have raised their ex-mill prices. At the same time in the southwestern region, electricity supply is still suffering from the impact of drought, and many manganese alloys producers in the region are operating at reduced rates and with high production costs. Looking at the current situation, China's domestic manganese alloys market is expected to continue its overall upward trend in the near term, while the mills will continue to raise their purchase prices.

Over the past week the ex-factory price of ferrosilicon (75 percent) has been at RMB 6,500-6,600/mt (949-964) in northwestern China, up RMB 200/mt ($29/mt) compared with the previous week. In addition, export quotations of domestic ferrosilicon (75 percent) have remained at $1,350-1400/mt FOB.

During the week in question, China's ferrosilicon market has witnessed general confusion regarding the increasing levels of market prices, mainly due to tight supplies of spot materials and increased input costs. Meanwhile, due to the increase in electricity charges last Friday in Ningxia, most local ferrosilicon producers have been increasing their ex-work prices. Since the production costs have increased by RMB 300/mt with the increase of RMB 0.03/kwh in electricity charges, the offers of some producers have reached RMB 6,600/mt ($938/mt), though with few deals concluded. With the price increasing in Ningxia, ferrosilicon quotations in other leading markets including Gansu, Inner Mongolia and Qinghai have also increased. Currently, most ferrosilicon producers report that inventories at the mills are not currently high and that demand from the mills has been increasing.