The rumors indicating that China may increase its export tariff on ferroalloys have gained strength recently.
Currently, the export tariff on ferrosilicon and ferrochrome is 15 percent, and that on other ferroalloys is 10 percent. In particular, an increase in the export tariffs of ferromanganese and ferromolybdenum would not be a surprise.
Speaking at a conference last week, China Ferroalloy Industry Association (CFLA) deputy chairman Zhang Zengchan stated that the restricting measures on ferroalloy exports might be increased due to the strong foreign demand and increasing prices.
This year, ferrosilicon export offers from China reached a record level of $960-980/mt FOB at the beginning of June, decreasing to $900-910/mt FOB recently. Meanwhile, domestic prices declined from RMB 6,000/mt ($798/mt) to RMB 5,400/mt ($718/mt) in the same period. Nevertheless, domestic prices are still very high compared to the levels of last year.
Meanwhile, the government is also expected to remove the preferential electricity charge policy for ferroalloy production, a move which would result in a sharp increase in production costs. The government had imposed the higher, differential electricity charge policy in July last year in order to pressurize high energy-consuming industries. In October of the same year, however, the government adopted preferential electricity rates for ferroalloy producers with production capacities of over 40,000 mt per annum. When this policy is abandoned, the electricity rate for these ferroalloy producers will be 50 percent higher than the standard rate.