India: Ferro silicon prices spike amid global tensions

India's ferro silicon prices skyrocketed w-o-w due to the Russia-Ukraine crisis curtailing supplies to Europe. Indian producers are maintaining price parity with international prices, which resulted in a significant increase in Indian offers.

According to SteelMint's assessment on 3 Mar'22, Bhutan's producers were offering at around INR 160,000-165,000/t exw while Guwahati's offers were at around INR 170,000/t exw-basis. Prices have been rising up to INR 30,000/t w-o-w from both Guwahati and Bhutan. However, some producers are offering even higher at around INR 175,000/t on exw-basis and sealed the deals too.

Market highlights

• Impact of Russia's invasion of Ukraine: Russia is the second-largest ferro silicon producer in the world, but its exports have been affected by the western sanctions. This has impacted ferro silicon transactions globally. Inquiries have started coming to India mainly from European and Asian buyers as they are considering Indian and Malaysian materials as alternatives. Russia exported around 445,000 t of ferro silicon in CY'21, according to customs. On average, 35,000-40,000 t of monthly requirements might have been sourced predominantly from India and Malaysia. These factors led to a significant hike in Indian ferro silicon prices.
  
  
  
  
• Coke prices shoot up: Prices of met coke (64%) jumped by INR 4,000/t w-o-w to INR 55,000- 56,000/t exw amidst all-time high prices of coking coal as supplies have been affected by heavy rains in Queensland. The increase in production cost has also raised offers.
  
  
• In addition, some major producers have stopped offering in hope of further hike, creating shortage in the market. On the contrary, buyers started booking material aggressively before a further hike was implemented. Overall, improved demand is also supporting ferro silicon prices.
  
  
• Furthermore, improved steel prices due to rising export inquiries have also led to a spike in ferro silicon prices. Steel gets a higher quality finish from ferro silicon because it removes oxygen from the metal. Ferro silicon of high purity and low carbon content is used in the production of steels used in transformers, motors, ball bearings, shock absorbers apart from cord steel used in automobile tyres and stainless steel.
  
  

Outlook

Producers are optimistic on prices in the near term since it appears unlikely that met coke prices will correct. Prices may not drop soon even if the war ends, as sanctions against Russia would remain in place.