India: Ferro silicon prices fall amid weak demand

Due to low demand, Indian ferro silicon (70%) prices declined by INR 700/t this week. Prices continued to fall despite higher production costs in the North Eastern belt.

According to SteelMint's assessment on 19 May, Guwahati-based producers were offering at around INR 122,000-123,500/t exw, while offers in Bhutan were hovering at INR 123,000/t exw.

Factors affecting prices

The ferro silicon market fluctuated at a low level; the spot price declined marginally and the downward trend in steel prices exerted pressure on the spot price. The overall market sentiment was negative. Steel mills have curtailed output and demand has taken a beating. This has significantly impacted ferro silicon manufacturing prices and resulted in a substantial supply-demand imbalance. Producers are having trouble negotiating better pricing and are selling material at present levels in order to keep the market afloat.

Furthermore, stainless steel demand has been lower than average as industry participants have become cautious and have taken a wait-and-watch strategy due to lack of clarity in the market.

This week, Chinese ferro silicon (75%) prices fluctuated between RMB 7,800 and 8,000/t. Prices have fallen, resulting in lower profits, and producers are unwilling to boost production. In addition, downstream orders are insufficient, and there is no space for improvement.

Outlook

Prices might fall considerably if the current trend continues. Loadshedding in the north-eastern region is unlikely to stop soon and so prices may decline further unless there is a sudden rise in demand.