5 factors that affect ferrosilicon prices that nobody will tell you
Ferrosilicon prices have been closely watched. As the main raw material in steel production, price fluctuations of related products, national industrial policies, environmental protection policies, etc. will affect the price fluctuations of ferrosilicon.
Today we will discuss 5 main factors that affect the price of ferrosilicon.
1. Variations in production costs
From the perspective of ferrosilicon production process, the production of ferrosilicon requires raw materials such as silica, iron raw materials, blue carbon and other raw materials and fuel power for electricity consumption. Among them, the production of ferrosilicon is an energy-intensive industry. Therefore, electricity is extremely important in ferrosilicon production. Electricity costs account for more than 60% of ferrosilicon production costs. It is a major component of ferrosilicon production costs.
Due to the large proportion of electricity and the instantaneity of electricity charges, changes in electricity prices have a more significant impact on output. If the electricity curtailment policy is implemented successively in various places, the electricity will be unstable, which will lead to the continuous increase in the cost of electricity prices. The increase in the cost of producing ferrosilicon has a certain impact on the price of ferrosilicon.
2. Factors of the development model of midstream enterprises in the industry
At present, ferrosilicon enterprises mainly have two development modes. One is an independent production and development enterprise. The raw materials and electricity required for this model need to be purchased from outside, and the production of ferrosilicon will be exported to the outside world.
The other is to develop as part of the recycling industry. Such enterprises are mainly resource-oriented. The materials required for ferrosilicon are provided by the enterprise. Ferrosilicon is produced and applied in the downstream industry chain.
In contrast, the enterprise resource utilization efficiency of the second development model is more efficient and cost-effective.
3. Demand impact of downstream steel industry
The market price of ferrosilicon will also be affected by downstream industries. Especially the steel industry. The development of the steel industry is obviously affected by the investment cycle of infrastructure construction and related policies.
When numerous infrastructure projects are in the production cycle, the demand for steel grows dramatically. This will drive the price of ferrosilicon to rise.
4. Relevant policy influencing factors
The release of relevant national policies affects the supply and demand of ferrosilicon, which in turn affects the price of ferrosilicon.
For example, the implementation of the power and production limit policy. On the one hand, the increase in electricity prices brought about by the power shortage increases the production cost of ferrosilicon. On the other hand, the production restriction of downstream steel mills has reduced the demand for ferrosilicon. The two have resulted in a decrease in both supply and demand of ferrosilicon, which seriously affects the price of ferrosilicon.
From another perspective, the implementation of the above-mentioned policies is also conducive to strengthening the energy consumption standards of related industries. This can highlight the competitiveness of advantageous enterprises. Thereby enhancing the overall strength of the industry.
5. The main funds drive the impact
The main institutional funds have a very significant driving effect on the price. The historic market of ferrosilicon is driven by speculative sentiment and main capital. Due to the continuous sharp decline of the "Three Coal Brothers", the entire black system has suffered a severe setback. Therefore, speculative funds have all withdrawn.
The above are some of the main factors that affect the price of ferrosilicon. Whether the price of ferrosilicon rises or falls affects everyone's heart. Darshan Alloy is a ferrosilicon manufacturer, 100% factory direct sales, providing the most affordable ferrosilicon price, contact us!