India: Ferro silicon prices inch up as electricity supply crunch affects production

Indian ferro silicon prices inched up marginally despite slow buying due to 40-50% production cuts amid electricity supply shortage.

Meghalaya is currently experiencing loadshedding for approximately 10 hours a day due to only 88 million units out of 200 million units of power being currently available. This is because of erratic power supply from the central share, as well as a valve failure at the Kopili Hydro Power Station.

Disruption in power supplies has reduced ferro silicon production by 40-50%, which may impact market dynamics if the current scenario continues. As a result, smelters are attempting to raise prices in anticipation of a supply shortage in the near-term.

According to SteelMint's assessment on 14 April, 2023, Guwahati-based producers were offering 70% grade at around INR 119,300/t exw, while Bhutan's offers remained stable at INR 120,000/t exw.

Furthermore, ferro silicon demand has been sluggish this week due to limited stainless steel sales. Falling ferro alloys prices has prompted buyers to go for bulk bookings.

On the other hand, the majority of producers are waiting for the reverse auction result of SAIL's ferro silicon purchase tender, which will be conducted in the coming days, to derive a clearer picture as regards price movements.

China market overview

Ferro silicon (75%) prices rose slightly this week due to the surge in magnesium metal prices. In contrast, ferro silicon (65-72%) was underperforming due to increased social stocks. At the moment, manufacturers are unsure of the extent of ferro silicon price cuts. According to SteelMint's assessment on 13 April, China's ferro silicon (Si-75%) prices inched up in Qinghai, Inner Mongolia, by RMB 150/t (USD 22/t) to RMB 8,100/t (USD 1,181/t) exw, while prices for Si-65% dropped by RMB 100/t (USD 15/t) to RMB 7,150/t (USD 1,042/t) ex-Inner Mongolia.

Outlook

Market participants, particularly producers, are optimistic about a price hike in the face of electricity curtailment. Smelters anticipate that an increase in electricity tariffs will raise production costs in the near-term. However, given the current buyer-centric market, a sharp increase in prices amid slow buying activities seems unlikely.