China's February ferro silicon output drops to 8-month low

In February, ferro silicon production among the 136 Chinese smelters under Mysteel's monthly survey slipped by 46,336 t or 9 .8% m-o-m to touch an eight-month low of 424,494 t. The surveyed smelters' output accounts for 95% of the country's total.

Among China's five major ferro silicon production bases, Northwest China's Ningxia Hui autonomous region posted the sharpest on-month fall of 21.57% in its ferro silicon output to 81,500 t, according to Mysteel's data.

Many ferro silicon smelters in Ningxia halted production and conducted maintenance works in February, given the meagre profit margins they could currently earn and sluggish demand from both steel mills and magnesium (Mg) manufacturers, a Shanghai-based analyst said.

Mysteel's monthly survey showed that Mg ingot production among the 53 Chinese independent manufacturers shrank by 6.72% on month to sit low at 73,060 t.

On the other hand, after the Chinese New Year holiday, steel mills gradually resumed their production, and steelmakers in southern China first tabled their bidding prices for ferro silicon for March delivery at around Yuan 6,780/t($942/t) including delivery and tax. The biding prices were much lower than smelters had expected, further dampening their production enthusiasm, Mysteel Global learned.

However, despite the low output level, the stocks at smelters continued to mount in February. Mysteel's weekly survey among the 60 Chinese independent ferro silicon smelters - which host about 79.8% of the country's total ferro silicon smelting capacity - showed that their total stocks gained by 9,810 t from 2 February to 81,200 t as of 1 March, heralding a supply-demand imbalance of the ferroalloy.

Besides, the softening prices of raw materials for ferro silicon production also dented the fundamentals of the ferro alloys. On 29 February, leading calcium carbide manufacturers across the country pared their buying prices for semi-coke by Yuan 30-50/t exw, leading the semi-coke market to move downward and weakening support for ferro silicon prices on the cost front accordingly.

The price of 75% grade ferro silicon under Mysteel's assessment for example had declined by Yuan 80.2/t from 31 January to Yuan 6,348/t including the 13% VAT as of 29 February.

Note: This article has been written in accordance with an agreement between Mysteel Global and BigMint.