Tight supplies help push up China’s common alloys market

Over the past week the Chinese domestic common alloys market has witnessed an improvement in demand for both manganese and silicon alloys. On the manganese market side, a tightness of supplies has been observed in the southwestern region due to the continuing drought. At the same time, domestic producers have generally been very reluctant to sell their materials. Meanwhile, general confusion regarding prices has been seen in the domestic ferrosilicon market.

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 8,300-8,500/mt ($1,217-1,246/mt) in the south of China, marking an increase of RMB 50/mt ($7/mt) week on week; at the same time, the mainstream price of FeMn65 in the south has remained at RMB 8,200-8,400/mt ($1,202-1,232/mt), while export offers of FeMn65Si17 have increased slightly to $1,500-1,550/mt FOB.

While China's manganese alloys market has continued its upward march during the week in question, relatively greater growth has been observed in the quotations of the northern mills. Due to the continuing drought in the southwestern region, electricity supplies are still affected and many mills are maintaining halts or cuts to their production. It is heard that most producers in the southwestern region, including Guizhou and Guangxi, have not yet resumed operations, though the tightness in electricity supplies is not as bad as it was. Due to the tight availability of materials, stockists have been increasing their prices for manganese alloys, thus, the mills are obliged to raise their purchase prices for manganese alloys in order to obtain the materials.

Over the past week the ex-factory price of ferrosilicon (75 percent) has been at RMB 6,300-6,400/mt (924-938) in northwestern China, up RMB 150/mt ($22/mt) compared with the previous week. In addition, export quotations of domestic ferrosilicon (75 percent) have increased to $1,350-1400/mt FOB.

During the week in question, China's ferrosilicon market has witnessed general confusion regarding market prices, mainly due to tight supplies of spot materials and increased input costs. Most ferrosilicon producers have been increasing their ex-work prices while some of them have even halted their sales for the time being, waiting for further price increases. Some producers whose furnaces were idled during the previous period are planning to resume production soon. Due to the price increases observed in both the domestic steel market and in the ferroalloys market, market players are bullish on the future prospects of the market.

Meanwhile, the ferrosilicon export volume has been improving in recent days. While export quotations have increased to $1,400/mt FOB, an improvement in market demand from foreign buyers has been observed, and this has also helped to push up the domestic ferrosilicon market to some extent.