Chinese ferro silicon market struggles with low demand, shrinking profit margins

CBC: Ferro silicon prices remained largely stable w-o-w on weak market Sentiment and high supply.

Grade 72% silicon: Prices edged down by RMB 100/t ($14/t), with ex-factory, tax-inclusive quotes at RMB 6,030-6,220/tonne (t) ($832-858/t).

Grade 75% silicon: Prices were unchanged for this grade, with quotes at RMB 6,590-6,780/t ($909-936/t).

Shrinking profit margins: The ferro silicon market remained stagnant w-o-w, with minimal price changes, low trading volume, and ongoing weak sentiment. Manufacturer profit margins continue to shrink, leading to reports of maintenance and production cuts in key areas.

Ferro silicon market under pressure: Combined with high overall supply and a downward-trending futures market, these factors contribute to a lack of confidence in the market. As a result, it is expected that the ferrosilicon market will remain in a weak and consolidating position in the near term.

Ferro silicon futures decline: On 14 November 2024, the Zhengzhou Commodity Exchange (ZCE) for January 2025 delivery of ferro silicon decreased by RMB 160/t ($22/t) w-o-w to RMB 6,304/t ($870/t) from RMB 6,424/t ($886/t) on 7 November 2024.

Outlook

Driven by supportive macroeconomic policies, a gradual recovery in terminal demand, and marginally rising costs, ferro silicon prices are expected to edge up slightly. Short-term fluctuations may occur due to market sentiment and speculative activity, but a substantial price increase remains unlikely in the near term.