China: Ferro silicon prices inch up amid cautious market sentiment

The ferro silicon market maintains its stability, with prices showing slight deviation this week - increasing by RMB 90/t ($13/t). However, recent developments, particularly the surge in demand resulting from steel mill bidding, have sparked notable shifts in market dynamics.

Slight increase in prices

• Grade 75% silicon: Prices increased by RMB 90/t ($13/t) to settle within a range of RMB 7,550-7,730/t ($1,063-$1,089/t) ex-works, including tax.
  
  
• Grade 72% silicon: Prices followed a similar trend, inching up by RMB 90/t ($13/t) to establish a new range of RMB 7,110-7,300/t ($1,002-$1,028/t) ex-works, including tax.
  
  

Rise in demand from steel mill bidding: Recent bidding by steel mills has spurred a notable uptick in demand for ferro silicon. This surge reflects positive prospects for producers, prompting adjustments in market quotations to accommodate higher demand.

Impact of input costs on market quotations: Factors such as fluctuating prices of semi-coke and electricity have contributed to adjustments in market quotations by ferro silicon producers that have increased moderately. These cost considerations play a pivotal role in shaping pricing strategies amidst changing market conditions.

Marginal increase in overall output: The news of factory resumptions in selected regions has led to a marginal uptick in overall output. While this signals a potential increase in supply, market activity still requires further improvement to achieve optimal balance.

Downstream reception and trader caution: Despite the surge in demand and adjustments in market quotations, downstream consumers remain cautious, exhibiting limited receptiveness to higher prices. This cautious sentiment is reflected in traders' reluctance to actively participate, with many adopting a wait-and-see approach.

Outlook

Short-term prospects for ferro silicon prices are optimistic with increased demand post-steel mill bidding. Yet, long-term growth potential is limited due to sluggishness in real estate and building materials markets, alongside a subdued steel industry, influencing ferro silicon prices.

It is important to consider both short-term fluctuations and long-term trends when making strategic decisions in the ferro silicon market.

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