Following the previous day, the main contract of ferrosilicon 2409 on the domestic futures market fell more than 4% in the morning on June 4, and fell nearly 13% in the past two trading days.
Previously, the main contract of ferrosilicon hit a one-year high of 8,234 yuan/ton on May 31, recording a gain of more than 13% in two trading days.
In just a few trading days, the ferrosilicon futures market staged a roller coaster market.
“The price of ferrosilicon futures fell sharply in the past two days, mainly because funds left the market and the market returned to fundamentals, but the spot market is expected to remain unchanged.” For the spot market situation of ferrosilicon, Shanghai Steel ferroalloy division ferrosilicon analyst Zheng Yanyao introduced that from January to April this year, ferrosilicon basically showed a weak decline, in mid-April after ten days, the price began to rebound, lasting until the end of May, the difference between high and low price is 1500 yuan/ton. Before April this year, the domestic ferrosilicon market was basically in a situation of greater supply than demand, and the downstream export level was stable in the past two months as steel production continued to increase. At the same time of small fluctuations in demand, the supply of ferrosilicon market has also shown an overall increase trend in the past two months, and the output has increased by nearly 100,000 tons in May compared with April.
On the spot market, business data show that since the beginning of 2024, the ferrosilicon market has been weak and declining, and spot prices and steel prices have continued to fall from January to April. The price of ferrosilicon in Ningxia fell to the low point of the year in March, the average market price reached 6233 yuan/ton, the end of May to the high point of the year, the average market price of 7714 yuan/ton, up about 1481 yuan/ton, an increase of 23.77%.
“Before the futures price started to rise significantly, ferrosilicon manufacturers had already appeared in the production of orders. Around the middle of May, many manufacturers have already reached the end of May or even the beginning of June.” In the view of Zhuo Chuang information analyst Yu Mingjing, the current round of the ferrosilicon market is mainly affected by the mismatch of supply and demand. She said that since May this year, the overall price of ferrosilicon has risen significantly. Previously, the price of ferrosilicon continued to hover below the cost line, resulting in a high proportion of manufacturers to stop production. Coupled with the recovery of hot metal production since April, the demand has increased and the supply has declined, so there has been a mismatch between supply and demand in the market since May.
It is reported that under the background of the previous rise in the price of ferrosilicon futures, some manufacturers do not offer closed orders. According to Yu Mingjing, before May 31, the cash price of ferrosilicon natural block including tax is 7100 yuan/ton, after the short-term price rise, the price of 72 ferrosilicon is 7500 yuan/ton to 7600 yuan/ton, and most manufacturers are still sealed.
“Between March and April this year, the lowest price in the ferrosilicon market fell to 6100 yuan/ton, reaching the cost line.” It’s not that high at the moment, but it’s profitable for most companies.” “She said.
Analysts in the interview mentioned that the recent rise in the price of ferrosilicon futures, on the one hand, is driven by the market supply and demand pattern, on the other hand, because of the silicon manganese has risen more since May, silicon manganese and ferrosilicon have a greater correlation, so silicon manganese to pull ferrosilicon futures rebound, the formation of a boost to the market mentality. In addition, the recent release of China’s energy saving and carbon reduction program has also boosted the market. According to previous experience, during the energy consumption dual control period in 2021, the prices of commodities with large power consumption in the production process have risen significantly, and the increase of ferrosilicon has reached 90%.
Recently, The State Council issued the “2024-2025 energy conservation and carbon reduction action Plan” mentioned that for the energy, steel industry, petrochemical and chemical industry, non-ferrous metal industry, building materials industry, construction, transportation, public institutions, energy products and equipment and other key areas of production capacity control program tasks, to provide support for energy conservation and carbon reduction.
It is mentioned that the layout of non-ferrous metal production capacity is optimized, the replacement of electrolytic aluminum production capacity is strictly implemented, the new smelting capacity of copper and alumina is strictly controlled, and the new capacity of silicon, lithium and magnesium industries is rationally distributed. Vigorously develop the recycled metal industry. By the end of 2025, the proportion of recycled metal supply will reach more than 24%, and the proportion of aluminum water direct alloying will increase to more than 90%.
“Energy conservation and carbon reduction policies have no direct impact on ferrosilicon at present, more of an emotional expectation.” Zheng Yanyao believes that the control of the scale of carbon mentioned in the policy on the raw material end of the ferrosilicon market also needs to see the actual landing situation. The policy proposes to cancel the preferential price of high energy consumption enterprises, at present, due to the green electricity component in the power composition of ferrosilicon manufacturers, it is difficult to directly affect the price of electricity for the time being, and the actual plan is still to be landed. Since the middle and late April, ferrosilicon has continued to show an upward trend, superimposing a positive macro impact, and the market’s bullish sentiment is still in. However, after entering the rainy season in June, steel is expected to weaken, affecting consumption, and prices may be under pressure.
Yu Mingjing also said that before the recent futures price increase, the company judged that there would be a correction in the ferrosilicon market price after mid-June. Aside from the futures price, just look at the fundamentals, the current price under the order has not been good in the previous period, the current production of downstream molten iron has basically reached the peak, the recent production of molten iron shows a slight decline, and the demand is expected to have no room for growth.
In addition, after the current price of the enterprise has a profit, some factories have begun to resume production, and the operating rate in May has been higher than the previous period. With the recovery of supply and the weakening of demand increment, the mismatch between supply and demand may be improved in the later stage, and the price may be downward.
Business analyst Yang Xue judged that under the current market, the profit of the production end is objective, the construction has increased, the supply has increased, the manufacturers have delivered smooth shipments to steel mills and plate prices, and most manufacturers have ordered production, and there is no sales pressure. Energy saving and carbon reduction policy has a certain drive on the plate, the industry still needs to pay attention to the specific landing of the policy, after 2021 energy consumption dual control basically completed industrial elimination and transformation, the follow-up policy guidance of raw material supply may be tightened, electricity prices may rise, the spot price of ferrosilicon is expected to follow the plate and cost changes.
