India: Ferro silicon prices escalate as buyers scramble to secure supplies

Indian ferro silicon prices climbed w-o-w on improved demand from the domestic and export markets as buyers were worried of prices escalating further.

According to SteelMint's assessment on 11 March, ferro silicon offers were at around INR 197,500/tonne exw - from both Meghalaya and Bhutan. However, some producers offered above INR 200,000/t but most deals concluded between INR 195,000- 200,000/t only.

Highlights-

• Domestic demand rises: Steel demand in the fourth quarter of the financial year is traditionally the highest, which in turn, supported demand of ferro silicon. However, this time, the ongoing war between Russia and Ukraine has drastically affected the trade dynamics and the fear of a steep surge in prices has prompted buyers to build up inventory.
  
  
• Export demand upbeat: Russia is the world's second-largest producer of ferro silicon after China. Prices of the material have seen a sharp rise due to the Russia-Ukraine crisis. The suspended supply from Russia has severely impacted the global market and the European Union especially. The sanctions imposed on Russia has led the European buyers to secure supplies from other countries. Indian suppliers have largely benifitted from the crisis and raised their offers subsequently.
  
  
• Raw material prices on upswing: Ferro silicon is a high power-intensive industry with power constituting around 65% of the total costs of production. Increased raw material costs (coal and coke) have also contributed to the hike in ferro silicon prices.
  
  

Outlook
Ferro silicon producers are optimistic and expect prices to increase even further. However, buyers are uncertain as to how high ferro silicon prices could go from here. The sharp rise in overall production costs could lead to plant shutdowns, thereby leaving a negative impact on ferro silicon demand and its prices.