Cost supports price

This year’s wonderful ferroalloy market is not less than the black series of other varieties. Since July, the black iron steel pipe period is on a roller coaster price, upward and downward trends are smoother. Since the beginning of July, the absolute price index of spot raw materials has surged to a record high of 12,659 yuan/ton at 7,429 yuan/ton. At the end of October, it started a unilateral downward trend. By November 18, it has fallen back to 8,487 yuan/ton, wiping out most of the previous increase, with a cumulative increase of 14.2%. Over the same period, the main contract for manganese silicon has risen 7.6 per cent. The current trend of ferrosilicon is synchronized with manganese silicon.

From July to September, under the background of dual energy consumption control and power shortage, the output of silicon manganese was limited, the factory inventory was rapidly consumed, and it was difficult to deliver new orders on time, which stimulated the downstream purchasing intention. In the current period, the national production of silica manganese was 867,000 tons, 857,000 tons and 655,000 tons, respectively. During the same period, downstream output of rectangular steel pipe was 86.79 million tons, 83.24 million tons and 73.75 million tons, respectively. Although both supply and demand showed a downward trend on a month-on-month basis, the production of silicon manganese decreased by 23.6% month-on-month in September, while the output of crude steel declined by 11.4% month-on-month. The shortage of silicon manganese supply escalated, and the price accelerated.

It is understood that since October, the shortage of silicon manganese supply has been alleviated to a certain extent, which is related to the resumption of production in Guangxi factories, the easing of power rationing in Inner Mongolia, the advantage of social inventory point price delivery after the futures plate has fallen from the high, and a large number of delivery resources flow to the terminal market. In October, the national production of thinner wall steel pipe was 744,000 tons, an increase of 89,000 tons, or 13.6 percent, compared with September, ending a 3-month continuous decline. During the same period, China’s crude steel output was 71.58 million tons, down 2.9 percent month-on-month.

The main reasons for the sharp decline in ferroalloy prices since late October are the changes in supply expectations, the decline in purchasing enthusiasm of steel mills and the collective decline in the price of coal chemical sector represented by thermal coal. Towards the end of the year, the pressure margin of dual-control energy consumption was relieved, the ferroalloy output continued to rise, and the operating rate and output of the current sample manufacturers roughly returned to the level before September.

In fact, at present, the market supply and demand structure show that supply exceeds demand. In view of this, the industry association suggests that all steel pipe companies limit production at peak hours and stop production, or use the safety load of power generation with electrode protection and tail gas protection, and the output is expected to reduce by 15%-20%.