China's ferro silicon output recovers further in June

Chinese ferro silicon production continued to recover for a second month in June, with the total tonnage up 19,300t on month at 427,600t, as more domestic smelters resumed production given the tight supplies in the spot market, according to Mysteel's latest monthly survey among the country's 128 major producers.

The surveyed smelters host almost all of China's Ferro silicon capacity, Mysteel Global notes. Last month's ferro silicon production was 12,600t lower from one year ago, though output in all the major Chinese production regions increased to varying degrees. Among them, production in the Ningxia Hui Autonomous Region in Northwest China posted the sharpest month-on-month rise of 15.1% to reach 65,500t, the survey showed.

"Ferro silicon supply in the domestic spot market is relatively tight given the smelters' restrictions on production, while demand from steel producers remains firm from the high levels of steel output," a market source in Shanghai said.

Another Mysteel survey among 247 blast-furnace and 71 electric-arc-furnace steel producers showed that daily crude steel production rallied for a fourth consecutive month in June, rising by another 2.4% on month to 2.92mn t/day. This was a new record high since Mysteel started the survey in January 2018 and indicated the high consumption of Ferro silicon among Chinese steel mills.

Thanks to the buoyant demand, China's Ferro silicon stocks at smelters' yards steadily emptied throughout last month, with the inventories held by the 60 independent Ferro silicon smelters Mysteel tracks reaching 59,400t as of July 3, lower by another 35,200t or 37.2% on month, and well below the normal level of around 100,000 tonnes. Capacity hosted by the 60 smelters in the sample covers 63.5% of the country's total.

Domestic Ferro silicon prices moved up gradually in June with the improved fundamentals. As of June 30, Mysteel's price of 75% grade Ferro silicon was higher by Yuan 120/tonne ($17/t) on month at Yuan 5,554/t including the 13% VAT. The uptick has continued into this month to touch a four-month high of Yuan 5,649/t including the 13% VAT as of July 7, according to Mysteel's database.

However, the tight supply in the domestic Ferro silicon market is expected to ease this month as output among smelters in China's major production bases has gradually returned to normal levels. This may put some pressure on Chinese Ferro silicon prices if demand from users does not remain buoyant, a market watcher predicted.

(This article has been published under the article exchange agreement between SteelMint Research and Mysteel Global.)