India: Ferro silicon tumbles on bearish Chinese prices

Indian ferro silicon prices have sunk again this week after Chinese prices decreased by RMB 4,650/tonne (t) ($726/t) w-o-w due to an ease in restrictions in dual policy control in China. This has given hope to Indian buyers that prices may fall further in the short term.

According to SteelMint's assessment on 11 Nov'21, producers in Bhutan reduced prices for ferro silicon (HC 70%) by INR 5,000/t to INR 260,000/t exw w-o-w. Meanwhile, Guwahati followed suit, decreasing prices by INR 17,650/t to INR 250,600/t exw on weekly basis.

Why Indian ferro silicon prices are falling?

• China's ferro silicon prices slip:
  At the beginning of the week, ferro silicon prices fell by RMB 400-1,000/t ($63-157/t). The Chinese government has eased the dual control policy, which resulted in an increase in ferro silicon production and decrease in prices. This compelled Indian and Bhutanese smelters to reduce their offers in the spot market as they maintain the price parity with Chinese prices.
  
  
• Sellers are trying to clear old inventory at low prices
  Indian stockist, mainly traders, have started offering lower prices, by up to INR 240,000/t exw in an effort to clear their old stocks after observing the continuous decline in prices since the end of October. As a result, this is prompting the bearish sentiments in the spot market.
  
  
• Buyers are in wait-and-watch mode
  Seaborne ferro silicon consumers are reluctant to book the material as they have enough inventory due to production cuts at steel mills. Meanwhile, some major steelmakers have significantly dropped the purchase prices by around RMB 5,000/t($783/t) m-o-m for November, booking material in the range of RMB 10,600-11,000/t ($1,661-1,724/t).
  In the meantime, Indian buyers are expecting that prices may come down further, creating weak demand in the market. This is also helping to break the prices of ferro silicon.
  
  

Outlook
As Chinese ferro silicon prices fall- in line with dull demand, buyers play the waiting game. Prices may fall further in the near term.