Sluggish demand weighs on Chinese Ferro silicon prices

Chinese ferrosilicon (FeSi) prices lost some steam over June 21-28, in line with the drop in FeSi futures prices on the Zhengzhou Commodity Exchange (ZCE). Sluggish demand from end-users was blamed for the fall in FeSi prices, a market insider said.
As of June 28, the domestic price of 75% grade FeSi under Mysteel's assessment had declined by Yuan 24/tonne ($3.3/t) from June 21 to settle at Yuan 6,811/t including the 13% VAT.

Many traders lost confidence and cut their offering prices after noting the decline in FeSi futures prices on the ZCE, a Shanghai-based analyst said.

The most-traded FeSi futures contract for September delivery closed the daytime trading session at Yuan 7,170/t on June 28, down by Yuan 76/t from the settlement price of June 21.

Many FeSi smelters trimmed or even halted production to conduct maintenance works, given sluggish demand from end-users and narrowing profit margins they could currently earn, he added.

Over June 16-22, daily FeSi output among the 136 Chinese smelters under Mysteel's tracking had declined for the second week by another 240 tonnes/day or 1.9% on week to 12,596 t/d on average. The surveyed smelters account for 95% of the country's total.

Most mills had finished bidding on FeSi for June delivery, therefore, trading activities in the market were lackluster, the analyst commented. Besides, summer is traditionally a slack period for steel consumption, so mills tended to procure only to fulfill their immediate production demand, he added.

The analyst also predicted that FeSi prices are likely to keep heading south in the near term, as many end-users are in no rush to buy FeSi, in consideration of their few steel orders in hand as well as the high FeSi stocks at the smelters.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.