production and demand of ferrosilicon in China

At present, the global annual production capacity of ferrosilicon is about 11.1 million tons, and China's production capacity is about 8 million tons, making it the world's largest producer. In 2020, the annual output of ferrosilicon in my country is 5.3209 million tons, a slight decrease in output compared with the same period last year.

production and demand of ferrosilicon in China

China's ferrosilicon production can be traced back to before the founding of the People's Republic of China, but the annual output was only a few hundred tons. After 1950, ferrosilicon production developed tremendously. Especially in the planned economy period, the state established a number of ferroalloy enterprises in various places and introduced large-scale ferrosilicon production equipment.

The expansion of my country's ferrosilicon production scale has gone through three stages: the first stage was in the mid-1980s. The second stage was the mid-to-late 1990s. The third stage is from 2000 to the present. With the continuous optimization of process technology and equipment, the production process of ferrosilicon is becoming more and more standardized.

The production distribution of ferrosilicon is closely related to the abundance of local resources. Therefore, the distribution of my country's ferrosilicon industry is mostly concentrated in the central and western regions where resources are more abundant. Ferrosilicon production concentration is high.

At present, there are five ferrosilicon producing areas in Inner Mongolia, Qinghai, Shaanxi, Ningxia and Gansu.

On the demand side of ferrosilicon

According to statistics, the consumption of ferrosilicon in my country in 2019 was 4.21 million tons. The consumption in 2020 was 5.06 million tons, a year-on-year increase of 20.19%. In 2020, the consumption is about 260,900 tons less than the output, which belongs to a state of tight balance between supply and demand.

Ferrosilicon is mainly used in the four major fields of iron and steel enterprises, foundry industry, metal magnesium and export. Among them, iron and steel enterprises consume the largest proportion of ferrosilicon. 70% of ferrosilicon production is absorbed by steel mill market demand. Metal magnesium, foundry industry, and export fields are second.

The steel industry is the main downstream consumer of domestic ferrosilicon. Ferrosilicon is mainly used in steelmaking in steel mills. The addition of ferrosilicon improves the strength, hardness and elasticity of the steel to ensure the quality of the steel.

Only 5 kilograms of ferrosilicon are needed to produce 1 ton of crude steel. The ferrosilicon used accounts for less than 1% per ton of steel produced. Therefore, the profit level of iron and steel enterprises is basically not affected by changes in ferrosilicon prices. In this way, the potential fluctuation range of ferrosilicon prices is relatively large.

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