Ferro Silicon Price Analysis
Overall, ferro silicon price in 2021 overall volatility is small. Judging from the overall situation this year, the downstream demand and upstream supply of ferrosilicon have shown growth. The ferrosilicon price per ton was high a year ago and has been showing a downward trend since then, reaching 5500 yuan/ton in the middle of the year and remaining stable. The industry’s annual profit is relatively meager, the upstream raw material blue charcoal price fluctuates slightly throughout the year, the electricity price basically remains stable, the crude steel output continues to increase, and both supply and demand increase.
However, the supply growth is slightly larger than the demand growth, and the market supply is slightly surplus, which makes the profit of ferrosilicon enterprises this year limited, and basically fluctuates within a narrow range above the cost line.
The price of raw materials fluctuates little, the cost is fixed, and the profit is limited
Silica & Semi-coke
In 2021, the market performance of ferrosilicon raw materials is stable, and the price of silica is between 140-200 yuan/ton. With the overcapacity of semi-coke, the market quotation has been maintained at a low level, and the price is between 700-800 yuan/ton.
Electricity charges will remain basically unchanged in 2021. With the subsequent development of the ferrosilicon market, it is not ruled out that some regions will introduce relevant preferential electricity tariff policies. On the whole, the production cost of ferrosilicon will be relatively stable in 2021.
The ferrosilicon price does not fluctuate much, and the profit is meager
Ferrosilicon production and profit
According to the output and profit data provided by professional industry statistical agencies, the profit in the first half of 2021 is relatively objective, with a profit per ton of about 350 yuan/ton, and the slow release of production capacity. The average monthly output of ferrosilicon in the first half of the year was about 458,900 tons, an increase of 10.3% compared with the same period last year. In the second half of the year, with the release of new production capacity, the operating rate rose, the supply of ferrosilicon was excessive, and the profits of manufacturers were compressed, and the profits of manufacturers were 188 yuan/ton. The growth rate of ferrosilicon market supply is greater than the increase in ferrosilicon demand. Excessive market supply has made market participants poorer in confidence, and the transaction price of ferrosilicon has been maintained at a relatively low level.
It can be seen from the price volatility index of ferrosilicon that the ferro silicon price first showed a cliff-like decline and then remained stable. The ferro silicon price trend basically showed a straight line in the second half of the year. The annual average ferrosilicon price was 5736 yuan/ton, down 11.32% from the same period last year. The price range was basically between 5500-6000 yuan/ton, and the price range dropped significantly compared to the same period last year. Manufacturers are afraid to keep more inventory due to financial pressure, and low-price shipments are common occurrences, which put pressure on the ferrosilicon price to rise.
Downstream Demand of Ferrosilicon Industry
Crude steel output continues to climb in 2021. The cumulative output from January to November is 904 million tons, an increase of 7% year on year, and the output of steel is 1.105 billion tons, an increase of 10% year on year. The output of stainless steel crude steel is expected to reach 28.953 million, an increase of 12.54% compared to the same period last year. The cumulative weekly (partial) value of thread output from building materials steel mills was 181 million tons, an increase of 11.5% year-on-year.
Opportunities and Challenges Facing Ferrosilicon Industry in 2022
2021 new capacity release did not meet expectations, due to low prices, many new plans delayed production. It is expected that ferrosilicon enterprises will gradually transform into medium-sized and large enterprises. After the accumulation of funds, manufacturers will continue to expand capacity. Ferrosilicon will be mainly concentrated in individual regions, and other enterprises without advantages or competitiveness will be eliminated.
Due to the slow increase of ferrosilicon capacity, high market supply, manufacturers of environmental protection equipment perfect, ferrosilicon price is difficult to have the situation of the big ups and downs in 2017. The ferro silicon price competition between main producing areas will be fierce. Only by controlling costs and reducing consumption can manufacturers gain a firm foothold in the fierce price war.