China's Jan Ferrosilicon output hits 7.5-year high

Chinese ferrosilicon production increased for the ninth month in January to hit a 7.5-year high of 533,000 t, as domestic smelters were active in ramping up output given the profitable Ferrosilicon prices and the low stock volumes at their yards, according to Mysteel's latest monthly survey among the country's 136 major producers.

Last month's production among the surveyed Ferrosilicon smelters, which together host almost all of the country's capacity for the ferroalloy rose by a significant 40,900 t or 8.3% on month, or up 12.5% from one year before, indicating the domestic smelters' high enthusiasm for production.

Ferrosilicon output of the country's five major production hubs all increased to varying degrees in January, mainly driven by the handsome profits the smelters could gain from selling their Ferrosilicon, Mysteel Global noted. Among the five bases, the tonnage in Ningxia in Northwest China posted the sharpest on-month rise of 28.8%, the survey showed.

Domestic Ferrosilicon prices saw substantial growth in January, stimulated by the stricter power curbs in Inner Mongolia in North China. Yet despite these curbs, a market source in Shanghai explained that operations at Inner Mongolia's Ferrosilicon smelters had not been affected significantly last month, as "most Ferrosilicon smelters are located in Erdos, but the city has not released specific restriction measures," she said.

In fact, Ferrosilicon output in Inner Mongolia, China's largest production base for the ferroalloy, actually witnessed a slight rise in January, rising by 0.7% on month to 181,100 t, according to the survey.

Also boosting the enthusiasm of the Chinese smelters for smelting was the generally low levels of Ferrosilicon inventories the producers were holding, Mysteel Global learned.

Mysteel's bi-weekly survey of Ferrosilicon stocks among China's 60 independent Ferrosilicon smelters showed that as of January 28, their total inventories were at 62,200 t, up by just 900/t from end-December and still far below the normal level of about 100,000 t. The 60 smelters hold 64% of the country's Ferrosilicon smelting capacity.

Although domestic Ferrosilicon prices retreated somewhat since late January, prices are still at a high level, according to Mysteel's data. As of January 29, the domestic price of 75% grade Ferrosilicon was assessed at Yuan 7,047/tonne ($1,088/t) including the 13% VAT, higher by Yuan 651/t from one month earlier, though off by a small Yuan 130/t from the 35-month high recorded on January 19.

Written by Nancy Zheng, zhengmm@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.