India: Ferro silicon prices spurt by INR 16,000/t w-o-w amid supply concerns

Indian ferro silicon prices surged by around INR 16,000/t w-o-w owing to increased demand but supply constraints. Production curtailment and supply disruptions amid landslides in the north eastern part of the country have led to the higher prices.

According to SteelMint's assessment on 24 June 2022, ferro silicon prices were hovering at around INR 150,000/t exw- Guwahati and Bhutan, while some producers were offering even higher in anticipation of better profits. Meanwhile, small deals have been recorded at higher prices.

Small steel mills were slightly concerned and hence booked smaller quantities, while only major steelmakers have booked large quantities this week. SteelMint recorded around 1,500 tonnes of deals this week.

Factors behind surging prices:

• Ferro silicon production has been reduced as many plants are scheduled to undergo maintenance. As a result, sellers increased their offers amid rising inquiries due to tight supply.
  
  
• Meanwhile, as a result of the heavy rain and landslides in the north east, transportation was disrupted and ferro silicon prices rose amid supply concerns. However, dispatches have resumed after the weather improved in Meghalaya.
  
  
• In addition, several producers have stopped offering on the spot market, which indicates that prices are likely to rise further, while a few other producers are sold out. As a result, material shortage has intensified in the Indian market, which is further strengthening ferro silicon prices.
  
  
• Furthermore, imports being more expensive than domestic, buyers turned to the latter offerings. Thus, prices rose amid sufficient inquiries.
  
  

China market overview:
China's ferro silicon prices dropped by RMB 300/t to RMB 9,100/t exw-Inner Mongolia with fewer deals and inquiries. Also, due to weekly decline in futures prices, most market participants were in a wait-and-watch mode. China's ferro silicon futures were down by 5% today due to weak demand. Ferro silicon futures on the Zhengzhou Commodity Exchange (ZCE) for Sepember 2022 delivery fell to RM 8,275/t.

Outlook
The market is optimistic due to a mismatch between supply and demand.

A major producer confided to SteelMint: "There is no way to predict where ferro silicon prices will go since the market has gone haywire."