Recently, the price of the international ferro silicon lumps market continued to rise, mainly due to the influence of the Russian-Ukrainian war. With Russia being sanctioned by economic sanctions, foreign customers are worried about the supply of ferrosilicon in the later period and the price soaring. Recently, the purchase and replenishment of stocks have been active, and the overall international ferrosilicon price has risen significantly.
Market participants expect that supply-side capacity will not be able to meet the substantial increase in demand, which will push up ferrosilicon prices. The escalation of the conflict between Russia and Ukraine has accelerated the realization of this prospect, with recent signs of panic buying in the spot market. European suppliers are retaining inventory to meet contractual obligations.
India’s Export Demand for Ferro Silicon Lumps Increased
Due to the impact of the international conflict on the supply of ferro silicon lumps in Europe, the price of ferrosilicon in India rose sharply in order to keep pace with the international price. Last week, Bhutanese ferrosilicon manufacturers quoted 160,000-165,000 rupees/ton ex-works, and Guwahati’s ex-works prices were around 170,000 rupees/ton, up 30,000 rupees/ton from last week. Some manufacturers even reported 175,000 rupees/ton, and there are transactions.
Russia is the second-largest producer of ferrosilicon lumps, but its exports are subject to Western sanctions, affecting the global supply of ferrosilicon. European and Asian buyers consider importing from India and Malaysia. In 2021, Russia will export 445,000 tons of ferro silicon lumps. An average of 35-40 thousand tons of ferrosilicon per month may need to be supplied by India and Malaysia. As a result, the price of ferrosilicon in India has risen sharply.
Soaring coke prices: Metallurgical coke (64%) rose by Rs 4,000/t to Rs 55,000-56,000/t as torrential rains in Queensland affected coke supplies. Increased production costs have also boosted ferrosilicon quotations.
In addition, some major manufacturers are reluctant to make quotations, hoping that prices will rise further, resulting in a shortage of supply in the market. Before ferrosilicon prices rose further, buyers actively replenished. Steel prices rose due to increased export inquiries, also pushing up ferrosilicon prices. As metallurgical coke prices are unlikely to pull back, short-term manufacturers are optimistic about ferrosilicon prices. Even if the war ends, the sanctions against Russia remain in place, so ferrosilicon prices are unlikely to drop.
Impact of Ferro Silicon Lumps Supply Shortage on International Market
Supply tensions extend to the ferro silicon lumps market as several major European steelmakers scramble to build up inventories.
Ferro silicon prices assessed in early March were as high as €3,500-3,600/t, 20% higher than the €2,900-3,000/t price assessed before the end of February.
Russia, the leading supplier of the ferrosilicon alloy, exported 430,852 tonnes of ferrosilicon in 2021 with a minimum silicon content of 55%, second only to China at 525,056 tonnes, customs data showed. But a European trading company said China would not be a stable supplier to Europe in the short term due to logistical costs and delays in shipping deliveries.
The ferro silicon market in Egypt provides an alternative supply source, although some steelmakers will have to adapt their manufacturing processes to accommodate lower silicon content.
Despite the current market volatility, market participants have expressed strong concerns about the medium-term supply of manganese alloys and ferrosilicon, as the operations of some major European producers remain suspended due to high energy costs.