Recently, the price of ferroalloy continues to oscillate, the market supply and demand are weak, and the market is lack of drive. On the one hand, since the fourth quarter, the blast furnace has continued to lose money, the output of hot metal and five major materials has fallen year-on-year, the downstream replenishment willingness is low, and the available days of steel mills have fallen to a near 6-year low; On the other hand, alloy production enterprises in the main producing areas have begun to reduce load, repair and stop furnace production under the influence of cost inversion and energy consumption policies, but the spot supply pressure is still large, especially in the past month, the registered warehouse bill of manganese silicon has been rising, and has risen to a high level at the beginning of last year. In the past two weeks, many places in the north issued cold wave, heavy snow warning, road transport in many places was seriously hindered, which had a certain impact on the production supply and transportation of alloy, short-term or supply and demand mismatch opportunities, but the price rebound is still subject to weak demand and high supply pressure, pre-festival oscillation, it is recommended that industrial enterprises to rebound to protect the idea of treatment.
On the supply side, from January to November this year, domestic ferrosilicon production totaled 5.05 million tons, down 7.6% year-on-year; Silicon manganese production of 9.65 million tons, an increase of 21%. The output of ferrosilicon and manganese-silicon is differentiated year on year, and the main reason is the fluctuation difference of raw materials such as coal, electricity and manganese ore: The cost of ferrosilicon accounts for more than 50%, which is the largest raw material cost; The largest cost of manganese silicon is manganese ore, accounting for 40%. Since the beginning of the year, the price of manganese ore has fallen by more than 10 yuan/ton, a decline of 20%, far exceeding the spot decline of manganese silicon, so the production profits of manganese silicon enterprises are considerable, and the enthusiasm of enterprises to start construction is always high. On the contrary, the settlement price of ferrosilicon in this year’s production areas is strong as a whole, and has not fallen with the loose supply of coal, especially in Ningxia, Shaanxi and other ferrosilicon production areas, the price rose 1-4 points from the beginning of the year, driving the cost of ferrosilicon to rise 80-320 yuan/ton, ferrosilicon enterprise profits fell off the cliff, after the National Day is once again into a loss situation, enterprises can only peak or reduce production to reduce losses. As a result, output fell sharply throughout the year.
It is worth noting that this year, the proportion of iron silicon and manganese silicon production in Inner Mongolia increased by 2% and 10% compared with last year, respectively, and the concentration trend of iron alloy production capacity is gradually clear. From a policy point of view, since the double control of energy consumption, the main producing areas of ferroalloy led by Inner Mongolia and Ningxia have continuously adjusted and optimized the level of industrial development, and the industry equipment and energy efficiency level, green energy replacement, recycling and other aspects have made a qualitative leap, and the regional competitive advantage has been greatly improved. It is expected that the concentration of ferroalloy production capacity will continue to increase in the future, and the energy efficiency and cost competition between enterprises will be more intense.
On the demand side, this year’s alloy consumption fell significantly, especially after the Spring Festival, “gold three silver four” traditional demand season, steel consumption was dragged down by real estate continued to decline. In the first 10 months of this year, the consumption of ferrosilicon and manganese silicon decreased by 7.2% and increased by 1.3%, respectively, and the consumption and export of crude steel dragged down significantly. Crude steel, molten iron and crude steel production continued to grow this year, but the first three quarters of the steel industry profit margin of 0.27%, in the industrial 41 categories ranked third from the bottom, steel mills always reduce costs and improve efficiency, improve capital efficiency as the main task. From the perspective of production raw materials, ferroalloy compared with iron ore and bifocal, the production volume and proportion is low, the procurement pricing power and right to speak has always been in the steel mill, the bargaining power of ferroalloy production enterprises is weak, so this year the steel mill end of the alloy procurement consumption shows a downward trend in volume and price, which is also the direct cause of the weak alloy price. In terms of exports, in the first 10 months of this year, iron silicon exports of 346,000 tons, silicon manganese exports of 44,000 tons, down 42.2% and 60% respectively. Exit cliff descent. Looking forward to 2024, domestic steel mills are still facing pressure to reduce production at a loss, and it is expected that the supply of crude steel still has room to fall, and the output fluctuates around 1 billion tons. Overseas, according to the forecast report released by the World Steel Association estimates that global steel demand will continue to grow by 1.9% in 2024, and steel demand in developed economies is expected to recover slowly in 2024. If deduced according to this optimistic expectation, global crude steel production and domestic ferroalloy exports are expected to stabilize in 2024.
At the cost end, as of December 18, according to estimates, the cost of ferrosilicon in Ningxia is 6770 yuan/ton, the profit is -140 yuan/ton, the cost of silicomanganic silicon is 6410 yuan/ton, the profit is -290 yuan/ton; The cost of ferrosilicon in Inner Mongolia is 6040 yuan/ton, the profit is -510 yuan/ton, the cost of silicon manganese is 6050 yuan/ton, the profit is 100 yuan/ton. Through comparison, it can be seen that due to the low electricity costs of large industries in Inner Mongolia, ferroalloy production has absolute advantages, so it also contributes to the main production capacity and output growth, and the concentration of alloy production capacity will continue to move closer to Inner Mongolia in the future.
