SunSirs: Market Condition Analysis of Ferrosilicon in 2019

As of December 18, the average price of domestic ferrosilicon 75# is 6000 yuan per ton,  1.64% lower than it in the beginning of the year. This decline is very similar to that of the first half year of 2018, which the price continually fell within 4 months, with the lowest price down to 5700 yuan per ton, fallen at more than 33.50%.

From 2016 to 2017, it can be seen that the price of ferrosilicon75# rose sharply, with the average price rising from 3,883 yuan/ton to 10,000 yuan/ton. It can be said that the market situation of ferrosilicon during this period was excellent. However, this form began to decline in 2018 and lasted for a long time until the first half of 2019. In the second half of 2019, there was an obvious downward trend. As for the spot price of ferrosilicon in 2020, whether it would bottom out and rebound or it could return to the high price in 2017 is still unknown.

The decline trend of 2019 is mainly reflected in the second half of 2019, especially in the third quarter. Silicon iron went through all the way down. Even with the occasional pullback, the pace of the decline still keeping downward, falling 0.23% in the second half and 4.29% in the third quarter.

The trend of ferrosilicon in 2019 can be divided into two stages

• Stage 1: January - July: Silicon iron rose sharply. The highest price of the market reached 6,300 yuan/ton, although there is a period of callback, this period can not stop the rising market. On January 1, 2019, the average price in the silicon iron market was 5,650 yuan/ton, and on July 25, the average price in the silicon iron market was 6,250 yuan/ton， increased 10.62%.
• Stage 2: From August to December, the price of ferrosilicon began to decline sharply in the second half of the year, with the price dropping from 6,200 yuan/ton to 6,000 yuan/ton. According to the data analyst of shengyishe’s monitoring , on August 1, 2019, the average price of silicon iron in the market was 6,193 yuan/ton. Then, on December 18, the average price was 6,000 yuan/ton, with the price dropping nearly 200 yuan/ton.

Why the silicon iron market in the first half of 2019 has a good momentum, but going downward at the second half of the year? This is inseparable from the relationship between the supply and demand of silicon iron.

Detailed analysis:

Ferrosilicon is an alloy of iron and silicon. Ferrosilicon is made by coke, steel chips, quartz (or silica) and smelted in an electric furnace.

Silicon and oxygen are easily made in silicon dioxide. And ferrosilicon is often used as a deoxidizer in steelmaking. At the same time, a large amount of heat is released when SiO2 is generated, which is beneficial to raising the temperature of molten steel while deoxidizing. At the same time, ferrosilicon can also be used as alloy element additive, which widely used in low alloy structural steel, spring steel, bearing steel, heat resistant steel and electrical steel. Ferrosilicon in the ferroalloy production and chemical industry, also commonly be used as reducing agent.

As can be seen from the balance sheet of supply and demand of ferrosilicon, the growth rate of apparent consumption in 2019 is significantly lower than that in 2018. At the same time, domestic production of ferrosilicon in 2019 to maintain the increase in output. In terms of actual demand, we had expected the increase in ferrosilicon demand from magnesium smelting to make up for the reduction in steel demand. The reduction in steel production will result in a reduction in demand for about 100,000 tonnes of ferrosilicon, while the increase in magnesium will result in an increase in demand for about 130,000 tonnes of ferrosilicon. But so far that prediction has proved wildly optimistic. Overall, the pressure on ferrosilicon in 2019 is mainly from the demand side.

Recently, the government make a new policy that the silicon iron manufacturers are required to avoid the peak hour production which indicated the silicon iron market is expected to recover. 

Then, business agency analyst verified with zhongwei manufacturers about this policy. Agency found that the current production situation is basically the same. Which means, because of the price decline in October to November in the silicon iron market, some manufacturers have been stopped furnace in Zhongwei region and production situation is not affected by the news.

Therefore, on the whole, silicon iron market is still on the falling trend.

In the current inventory aspect, most manufacturers said the current spot is tight, short of the inventory. Only a few large manufacturers said they had some inventory. Combined with the data analysis, the analyst forecasts for 2010 ferrosilicon market is more optimistic. Spot prices of ferrosilicon are likely to rise.

f you have any questions, please feel free to contact SunSirs with support@sunsirs.com