Today, the prices of ferroalloys in China have increased to varying degrees, such as silicon calcium alloys, metallic silicon, ferrochrome, etc. As an upstream industry of the steel industry, the fluctuations of ferroalloys are bound to have a greater impact than the steel industry. So what happened in China recently that caused the price of ferroalloys to increase? Anyang Zhenxin Metallurgical Materials Co., Ltd., as China’s leading ferroalloy manufacturer, analyzes the reasons for you.
Tibet earthquake causes ferroalloy supply chain obstruction
On January 7, 2025, a 6.8-magnitude earthquake occurred in Dingri County, Tibet, China. This earthquake affected the price of ferroalloys to a certain extent.
- Supply chain impact. The Tibet earthquake affected the factories and equipment of local ferroalloy production enterprises, causing damage to infrastructure such as electricity and transportation, resulting in stagnation and reduction of ferroalloy production.
- Demand side impact. The reconstruction work after the earthquake greatly increased the demand for domestic steel products, indirectly driving up the demand for ferroalloys and pushing up prices.
- Raw material supply. The Tibet region is China’s main mining area for chromite, boron, iron ore and rare earth minerals. The earthquake in Tibet has affected the mining and transportation of ferroalloy raw materials, resulting in a shortage of raw materials, pushing up raw material prices, increasing the cost of ferroalloy production, and thus driving up prices，Especially ferrochrome, ferrosilicon, calcium silicon and other ferroalloy products.
The Chinese government requires energy save and emission reduction
Impact on the supply side of ferroalloys. Ferroalloy production belongs to a high-energy-consuming industry. Under the energy-saving and emission-reduction policy, production capacity with high consumption and low efficiency will be eliminated, small blast furnaces and small electric furnaces will be shut down, and the overall output will decrease, resulting in a reduction in ferroalloy supply.
Ferroalloy factories will stop production one after another during the Spring Festival holiday.
January 29, 2025 is the Chinese New Year, but the factories will be closed a month in advance. At present, many ferroalloys have stopped production, and warehouse inventory is insufficient, resulting in a reduction in overall supply. In addition, the holiday lasts for a long time, about 15-30 days, so the scale of the shutdown is large and the time is long, which may cause a temporary shortage of market supply, resulting in China’s ferroalloy prices to rise again due to supply and demand issues.
