The supply and demand of ferro silicon and silicon manganese

Ferro silicon and Silicate Manganese Supply, Demand, and Price Analysis

As important industrial raw materials, ferro silicon and silicomanganese are closely watched for their market supply and demand and price trends. Currently, the rise in ferro silicon prices is mainly influenced by expectations of future power rationing policies, which will lead to increased electricity costs and thus affect ferro silicon production. Meanwhile, the rise in silicomanganese prices is primarily driven by rising manganese ore prices.

1.From a supply and demand perspective, the demand for ferro silicon and silicomanganese mainly comes from the steel industry. According to data from SteelNet, demand for ferro silicon and silicomanganese is gradually recovering, approaching 2023 levels. This is related to the gradual commencement of construction and infrastructure projects; with funding in place, both demand and production are increasing.

2.In terms of production, ferro silicon production has significantly exceeded the levels of the same period in previous years, while silicomanganese production, although showing some recovery, remains at a low level. In terms of operating rates, the operating rates of the ferro silicon and silicomanganese industries have remained low, around 50%-60%, reflecting the overall overcapacity problem in the industry.

3.Furthermore, the number of warehouse receipts for ferro silicon and silicomanganese is also worth noting. Currently, the number of warehouse receipts for ferrosilicon is comparable to previous years, while the number for ferromanganese has significantly exceeded the levels of the same period in previous years. This is mainly due to the sharp rise in ferromanganese futures prices, which has created arbitrage opportunities in the market, leading some companies to transfer warehouse receipts to their warehouses.

Looking at the basis, the current basis for the ferro silicon industry is -408, while the basis for the ferromanganese industry has exceeded the historical range, reaching 624. This reflects market expectations regarding the future supply-demand gap and uncertainty about the effectiveness of policy implementation.

In terms of profits, the ferro silicon industry's profits have improved significantly, with profits in Ningxia reaching around 1000 yuan, a high level compared to the past three years. This will help support the growth of ferro silicon production. However, if policies are not strictly enforced, spot prices may continue to rise, but the supply-demand situation for ferro silicon will not experience a sustained tightness.

In contrast, the profit increase in the ferromanganese industry is smaller, mainly due to the strong price of manganese ore, which has pushed up the costs of the ferromanganese industry. Despite this, the spot price of ferromanganese is relatively strong, but future increases in ferromanganese production may be less than those for ferro silicon.

In general, the supply and demand situation and price trends of the ferro silicon and ferromanganese industries are influenced by a variety of factors, including policy expectations, industry operating rates, warehouse receipts, basis, and profit levels. Under the current market environment, profit levels in the ferrosilicon and ferromanganese industries have improved, but future production increases may be affected by the strength of policy implementation and changes in market demand.
 

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