Since April, the price of ferroalloy has bottomed out, and the rebound rate of manganese silicon is close to 10% and the rebound rate is close to 8%.
“On the one hand, it is the repair of the whole black commodity sentiment, and on the other hand, it is the improvement of the fundamentals of the ferroalloy itself.” Xu Yidan, a ferroalloy researcher at Guangfa Futures, said that from the perspective of the entire black industry chain, after the decline in prices in the first quarter, plate prices have basically been fully priced pessimistic reality, and the mood is obviously repaired. This repair is accompanied by the emergence of macro good news, such as accelerating the progress of debt issuance and the promotion of the “old for new” policy, but also with the smooth removal of finished material inventory from a high level and the slow resumption of hot metal production, and there is currently no major contradiction between the supply and demand of finished materials.
Founder medium term futures ferroalloy senior analyst Bu Mimi believes that the current round of the market is mainly driven by the raw material end, manganese ore prices continue to rise and the stabilization of coal prices led to manganese silicon spot production costs upward. In addition, manganese silicon manufacturers continue to reduce production, and the pressure on the supply side has weakened. The spot price of manganese silicon stabilized and recovered, but the spot price increased less than the raw material price.
It is reported that from the point of view of ferroalloy itself, the supply and demand balance sheet has improved significantly, more from ferrosilicon and manganese silicon manufacturers in the long-term low profit production reduction, with the expansion of production reduction from March, and even supply and demand gap, which also makes the inventory contradiction in the early stage of ferroalloy has been alleviated to a certain extent. Since April, the support for ferroalloy has gradually strengthened. Carbon, chemical coke followed, and the price stabilized and rebounded, while manganese ore went out of the independent upward market after the suspension of South32’s Australian business, driving the price of manganese silicon to rise strongly.
Business people in the Northwest told reporters that the current spot market sentiment has also been repaired, the prices of producers and traders have risen, and some steel prices have increased slightly. However, the actual demand has not been significantly repaired, the amount of steel has not increased, so the traders reserve enthusiasm is not high, after the price rise more wait and see, take goods more cautious.
Xu Yidan introduced that since the beginning of the year, ferroalloy has presented a weak pattern of supply and demand. On the supply side, ferrosilicon has begun to reduce production since November last year, since this year, manufacturers have increased supply pressure under the long-term loss and warehouse accumulation, and the production rate has accelerated, and the first quarter production fell 10.23% year-on-year; The production reduction time of manganese silicon is relatively lagging behind that of iron silicon, since March, Ningxia, Inner Mongolia and other low-cost areas have increased pressure, manufacturers have increased production cuts and maintenance, while Guangxi, Guizhou and other southern main producing areas have maintained low operating rates since the beginning of the year, the burden of manufacturers has increased under the long-term loss, and the cost gap between the north and the south has gradually widened, and the market competition of manganese silicon has further intensified. From the demand side, the recovery of steel demand is slow, the first quarter of China’s crude steel production of 260 million tons, down 1.9%, and due to the continued weakness of real estate new construction and construction projects slow, the production reduction of building materials is very significant, the production reduction of more than 20%. Overseas crude steel production has gradually recovered, and cumulative exports of ferrosilicon have increased slightly from January to March. In terms of non-steel demand, metal magnesium manufacturers have a strong willingness to price, production remains stable, and demand for 75 ferrosilicon is still boosted; As manufacturers continued to lose money, the first quarter of a small production cut. Non-steel demand in the first quarter played a supporting role in ferrosilicon, but it was still unable to make up for the reduction in steelmaking demand.
In fact, although the current spot market price has risen, but because the downstream demand is general, the price increase is limited compared with the spot price of raw materials, and the profits of the manganese silicon industry are squeezed by the upstream and downstream. At present, most of the main production areas of manganese silicon manufacturers are in a state of loss, and the Inner Mongolia production area, which has maintained a certain profit for most of last year, is also in a state of loss.
In addition, the current ferroalloy spot market shows rising production costs, and manufacturers’ production profits are still at a low state. On March 20, damaged by the hurricane, South32 mine’s Australian manganese ore terminal was damaged, the supply of Australian manganese ore declined in stages, and the price of manganese ore continued to rise, of which the mainstream mines such as Australian ore, Gabon mine and South African mine increased by more than 10%, and the price of manganese ore is expected to remain strong in the short term. In April, chemical coke prices also stabilized and rebounded, Ningxia region chemical coke prices 1480 yuan/ton, up 120 yuan/ton from the previous low, upstream coal prices stabilized, coking coal futures prices rebounded, or will drive chemical coke prices continue to rise. Overall, in April, affected by the rising price of manganese ore, the immediate production cost of manganese silicon moved up, and the production cost increased by 300-350 yuan/ton.
“In late March, under the continuous compression of production profits and the gradual increase of inventory pressure of manufacturers in Inner Mongolia, manganese silicon production production increased rapidly, production fell sharply, the weekly production of manganese silicon in January to March was basically around 200,000 tons, and the weekly average production of manganese silicon in April was 163,000 tons, down 15.7% from the previous month, the production reduction was mainly contributed by Inner Mongolia, Yunnan and Guangxi. Ningxia’s production region saw a large reduction in production in March. In the short term, in the case of profit has not been substantially repaired, it is expected that manganese silicon production is difficult to have a large rebound.” Bu Mimi said that in April, the five major steel production changed little, and the consumption of manganese silicon was still much lower than in previous years. Affected by profits and expectations, the willingness of steel mills to replenish raw materials is weak, and the available days of manganese silicon inventory in steel mills are 16 days, which is about 3 days lower than last year. Whether from the steel consumption or from the steel replenishment demand, manganese silicon demand is still weak in the short term.
In March, South32, the world’s largest manganese mine, announced that its Australian business had been affected by the hurricane since May to suspend sales, and the third quarter of the fiscal year 2024 showed that it is expected to restart terminal operations and export sales in the third quarter of the fiscal year 2025, but it is also evaluating alternative transportation solutions. Outer pan manganese ore is still expected to raise prices. It is estimated that the South32 Australian business shutdown is expected to form a reduction of 2.5 million to 3.5 million tons, but the rest of the mine will be replaced by part of the amount to hedge the reduction of South32, combined with the proportion of global manganese ore shipped to China, it is expected that China’s manganese ore imports will decline by 3%-5% this year, and the short-term price of manganese ore will continue to rise. On the whole, ferroalloy or will continue to follow the black series of other varieties to maintain a strong performance, but the upward height depends on the recovery of steelmaking demand, due to the reason of manganese ore, manganese silicon prices will be stronger than iron silicon, double silicon price spread still has room to shrink.
“At present, the production cost is still the main driver of manganese silicon futures prices, in the short term, driven by the strong rise in manganese ore prices, manganese silicon futures prices are expected to continue to rise, but the high inventory of manganese silicon on the disk pressure still exists, as the price continues to rise, the disk pressure is also building up, is expected in May manganese silicon prices high fall, pay attention to manganese ore prices and chemical coke price changes.” For alloy production enterprises, pay attention to the basis of low and high selling opportunities.”
