India: Ferrosilicon prices shoot up on supply constraints

Indian ferrosilicon prices surged up after the supply issues intensified during the week. Most of the producers remain out of stock and are only fulfilling the backlog orders.

Currently, prices are at around *INR 112,000/t Ex-Bhutan and *INR 120,000-121,000/t Ex-Guwahati. Meanwhile, the export inquiries are good, but the Bhutanese producers are more interested in the domestic market due to supply inconvenience and better price realization.

Key Highlights:

Bhutanese supplies remained interrupted

Bhutanese producers are still trying to clear the backlog orders of INR 98,000-104,000/t, therefore are unable to take orders for immediate dispatches. Meanwhile, the delay in the BIS certification order extension affected the dispatches for three days starting from 23rd Apr '21. This also boosted the sentiments of the traders and ferrosilicon producers in India. Meanwhile, few units in Bhutan have also suspended operations due to a surge in Covid cases in the plant.

Meghalaya producers facing 8 hours of load shedding

Meghalaya producers were already distraught over the continuous interruption in the electricity supplies. Meanwhile, the load shedding remains for 8 hours, which is a matter of grave concern for the producers as not only the production quantity suffers but the grade too might also get affected due to this. "To maintain the grade, we need to use more power, which is making the cost of production much higher. Meanwhile, production is down by almost 50% during this period.", shared a producer.

Chinese export tax on Ferrosilicon increases by 5%

In an announcement made yesterday, China increased export tax from 20% to 25% on ferrosilicon from 1st May. The increase in tariffs coupled with a recent decline in the US dollar exchange rate will lead to increased costs from China. Today, the prices of Chinese ferrosilicon increased by $60/t to $1460/t Fob China. Although, this might be a good opportunity for India in exports, but producers are wary that with the current labour shortage, the sizing of material would be a big issue, thus they might be deprived of the opportunity.

Outlook
Producers remain worried about the closure of induction furnaces recently, due to oxygen shortage. However, with the increased supply/dispatch issues clubbed with tepid demand, the market remains ambiguous about the future pricing trend after the supply eases. Meanwhile, Bhutanese producers reported that the prices might remain on the higher side for the coming few weeks.

*Correction: In the article posted earlier, the currency was wrongly mentioned as $, which has been corrected to INR