China's ferro silicon output falls to almost 3-year low in May

In May, ferrosilicon (FeSi) production among the 136 Chinese smelters under Mysteel's monthly survey dropped by 2,434 tonnes or 0.6% on month to near a three-year low of 414,991 tonnes. The surveyed smelters' output accounts for 95% of the country's total.

Among China's five major FeSi production bases, the production in Northwest China's Gansu jumped 7.2% from April to reach 35,880 tonnes in May, while output in Northwest China's Shaanxi posted the steepest on-month fall of 15.7% to 50,780 tonnes, according to Mysteel's data.

Many smelters in Gansu and North China's Inner Mongolia were willing to ramp up FeSi output in May, as they could still earn some profit margins, while loss-making smelters in other production bases had to trim or halt their production to avoid further losses, a Shanghai-based analyst said.

On the other hand, most steel mills only procured the ferroalloy to meet their immediate needs last month, and many magnesium manufacturers - another sizeable consumer of FeSi - halted or trimmed their production due to the sluggish downstream demand for the metal.

Accordingly, the FeSi stocks at the smelters continued to pile up in May. Mysteel's bi-weekly survey among the 60 Chinese independent FeSi smelters which host about 80% of China's FeSi smelting capacity showed that their total stocks gained 8,740 tonnes from April 28 to 84,040 tonnes as of May 26.

Weak demand from end-users continued to weigh on FeSi prices. The price of 75% grade FeSi under Mysteel's assessment had declined by Yuan 315/tonne ($44.2/t) from April 28 to Yuan 7,034/t including the 13% VAT as of May 31.

The bidding volume of FeSi for June delivery tabled by Hebei Iron & Steel (HBIS), a leading steel producer headquartered in North China's Hebei, lost 264 tonnes on month to 2,236 tonnes, according to Mysteel's survey.

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