Why has the market been falling lately

Ferrosilicon market is getting stronger

As of Q4 2020, traded quantities of ferrosilicon in the global market have declined, reflecting the unwillingness of consumers to pay more for the alloys. In addition, the prospects for the development of the steel market in the first quarter of 2021 were not clear enough at this point in time. This tendency has also been observed in the activity of buyers of Si products on the Metalshub marketplace. In December, however, the steel mills increased their purchases quickly as they were sold out with the finished product by April, and that with very positive expectations for a recovery in Q1 2021. Despite higher asking prices, quarterly and annual contracts for ferrosilicon with end users were signed Completed notable discounts on Metalshub.

COVID-19 and ferrosilicon prices

In the first few months of COVID-19, the ferrosilicon market was mainly affected by low supply. The lockdowns in China in particular contributed to low production of the alloy. This, in turn, caused ferrosilicon market prices to peak in March and April.

Metalshub average weighted weekly price for FeSi, EUR per t, FCA Europe:

Prices fell as China got out of its blockades and supplies of materials began to flow out of the country again. However, the regained supply from China does not offset the supply bottleneck that the industry is now facing.

A shortage of ferrosilicon in the market

One of Europe's largest ferrosilicon manufacturers, Ferroglobe, has not only shut down production at its facilities in France, but has also reduced the production of standard-quality ferrosilicon at its facility in northern Spain. It is not yet known whether Ferroglobe intends to resume production in the near future.

Similarly, the supply of ferrosilicon from Brazil was halted for a while in November because one of the company's plants went out of production. At the same time, COVID-19 has had an impact on freight rates, which have increased enormously over the course of the year. These higher rates have reduced Europe's supply of the Malaysian alloy as freight prices drive up the ferrosilicon shipped in Malaysia. A price level that is too high to compete with current European prices.

With so many long-term contracts being signed at this time of year, we have seen a natural surge in the price of ferrosilicon recently. Despite an overheated market, however, there are no indications that ferrosilicon prices will continue to rise in order to achieve the growth expected so far.

Short-lived factors affect ferrosilicon prices

Nevertheless, many factors have influenced the pricing of the alloy in the past few months. These changes make it difficult to foresee market developments and remain competitive.

To keep up with the market, it is important to have access to a price index that takes these events into account without having to research them separately. The Price Discovery Service Metalshub offers weekly updated price indices for various ferrous alloys based on real data from market transactions.

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