ferrosilicon prices remain low profit in the second half of 2022

In the second half of 2021, the production of ferroalloy enterprises with high energy consumption will be greatly restricted. Ferrosilicon production fell. However, at the end of September and the beginning of October, when the production restrictions were the most severe, the price of ferroalloys hit a record high. Among them, due to the higher energy consumption of ferrosilicon, the impact of the production restriction policy is more serious. The price of ferrosilicon once surpassed that of silicon manganese. The highest price is also 4,000 yuan/ton higher than that of silicon-manganese.

In October 2021, ferrosilicon production rebounded rapidly, stimulated by high profits. The imbalance between supply and demand has been alleviated. As a result, the price of ferrosilicon futures fell rapidly, and the market went up and down rapidly. The time when ferroalloys are most in short supply has passed. At the same time, steel production dropped sharply, and demand for ferrosilicon was weak. Inventories began to build up as the shortage of supply reversed. The price of ferrosilicon also fell all the way to the cost line.

Since 2022, the constraints on the production of ferroalloys have been relaxed, silicon manganese and ferrosilicon manufacturers have resumed production, and the production of ferroalloys has gradually recovered. The profit level of steel mills was better in the first quarter. Therefore, the bidding price of ferrosilicon steel mills is at a high level in the same period in recent years. The prices of ferrosilicon and manganese-silicon futures broke out of the year's highs in April. Since the second quarter, the profit of steel mills has been continuously compressed, and the willingness of steel mills to replenish inventories is not strong. In this context, the price of ferrosilicon entered a downward channel.

Summarize

The price of ferrosilicon this year is higher than that of 2021. In the second half of the year, ferrosilicon manufacturers will maintain a relatively fierce competition pattern. This will lead to continued thin ferrosilicon profits. As a result, the price of ferrosilicon oscillates slightly near the cost line.