China's FeSi output rebounds by 5.2% on month
Throughout December, daily FeSi output among the sampled smelters averaged 16,343 tonnes/day, climbing by 286 t/d or 1.8% from November, the survey results show.
Despite last month's uptick, full-year 2023 production of the ferroalloy among the surveyed smelters was still lower by 6.88% from 2022 at 5.6 million tonnes.
The rise in December's output was linked to the resumption of operations by some magnesium smelters from Fugu county in Northwest China's Shaanxi province, the world's largest magnesium producing region, which prompted some FeSi smelters to increase their own output, Mysteel Global noted.
Last spring, some Mg smelters in the county were found to be operating old facilities outlawed by the local government for being inefficient and polluting and were forced to halt them, which sent Chinese magnesium production tumbling to 51,000 tonnes in June 2023, compared with 73,600 in October 2022. By last month, with old equipment swapped for new and production restarted, China's Mg ingot production jumped by 16.4% from November to hit 68,700 tonnes, Mysteel data shows.
Meanwhile, sentiment among FeSi Smelters also improved moderately in December when they found that steelmakers were not cutting steel production as severely as expected, a Shanghai-based analyst said. However, the rise in FeSi output exerted pressure on prices, which the steelmakers reacted to.
For example, the bidding volume of FeSi tabled by Hebei Iron and Steel Group, a major steel producer in North China's Hebei province, was reported at 1,710 tonnes for delivery in December, dropping by another 153 tonnes from the total for November, according to Mysteel's survey.
As of December 29, the price of 75% grade FeSi was assessed by Mysteel at Yuan 6,588/tonne ($921/t) including the 13% VAT, down by Yuan 114/t compared with the end of November.
FeSi prices in the derivative market also weakened, with the most-traded FeSi contract on the Zhengzhou Futures Exchange for delivery in March 2024 closing the daytime trading session at Yuan 6,754/t on December 29, lower by Yuan 198/t from the settlement price on November 30, according to the exchange's data.
This month, domestic FeSi prices are expected to stay under pressure, as domestic prices of semi-coke – a substitute for metallurgical coke used in FeSi production – lost ground at the beginning of this month.
For example, Mysteel's assessment of the price of semi-coke of small granularity in Shenmu in Northwest China's Shaanxi had slipped by Yuan 50/t on week as of January 2 to reach Yuan 1,030/t, weakening the support for FeSi prices on the cost front, Mysteel Global observed.
Written by Adele Pan, panqinjie@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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