It is reported that special ferroalloy market still lingers in weak and dull operation with price lost in downswings though March is usually the traditional peak season for steel market, this is not the case in this year. Industry analysts forecast sluggish performance will continue in a short term and price will fall further yet the drop will slow down.
Special ferroalloy market seems perform worse than common ferroalloy in recent days. FeMo price keeps diving this week to CNY 110,000 per tonne to CNY 112,000 per tonne and transaction price falls to below CNY 110,000 per tonne. Steelmakers' purchase prices stay at CNY 105,000 per tonne to CNY 107,000 per tonne down CNY 3,000 per tonne to CNY 5,000 per tonne from previous level. Prices for V-series alloys also drop. 50 FeV is now offered at CNY 103,000 per tonne to CNY 108,000 per tonne with spot price of CNY 102,000 per tonne to CNY 107,000 per tonne down CNY 2,000 per tonne. FeW price slips to CNY 118,000 per tonne to CNY 120,000 per tonne and lowest transaction price hits CNY 105,000 per tonne decreasing by CNY 3,000 per tonne to CNY 5,000 per tonne within a week.
Traders and analysts believe weak operation and dull deals can be attributing to the following factors:
1. Due to fluctuating steel market, demand from downstream industries, especially steel sector, remains insufficient. Stock of V-contained high strength third-grade rebar now reaches 250,000 tonnes in Shanghai only. Stainless steel which consumes large amounts of ferroalloys also witnesses stagnant operation for a long time. Stainless steel price loses another CNY 500 per tonne to CNY 600 per tonne this week. Besides, high quality and special steel market appears bleak owing to waning demand from downstream manufacturing industry. Steelmakers mainly consume inventories at the moment and keep a cautious attitude towards special ferroalloy purchasing. Some plan to buy FeMn in mid and late Mar yet will knock down prices maximally. Some end-users still hold a fence-sitting attitude and are not enthusiastic in purchasing. Gloomy demand from end-users indicates special ferroalloy market can hardly revive.
2. Traders are not active in sales. As the whole ferroalloy market is trapped in weak and bleak operation, traders are unconfident in future market and mainly hold a wait-and-see attitude. Some traders strengthen sales and clear out stocks in order to accelerate capital reflow. This weakens the upward momentum for special ferroalloy market.
3. Gloomy international market also affects domestic market. Steel sector has been severely impacted by global financial crisis and steelmakers all reduce steel output, leading to shrinking demand for ferroalloy. 75% FeW price has slid to USD 27 per kilogram to USD 28 per kilogram from USD 29.5 per kilogram to USD 31 per kilogram within one week. Vanadium pentoxide is quoted at USD 6 per pound to 6.5 per pound; FeV at USD 22.5 per kilogram to USD 23.5 per kilogram down by USD 1 per kilogram. Sluggish international ferroalloy market has changed China's ferroalloy imports and exports. Jan exports hit 89,800 tons while imports registered 100,700 tons. China exported only 6 tonnes of FeMn in this January collapsing from the 1,068 tons in last January. FeMo exports started to shrink since last November. Figures recorded 99.5 tonnes in November 229.6 tonnes in December and almost zero in this January.
Insiders point out given waning domestic demand, interrupted exports and increasing imports, domestic market faces growing pressure. Special ferroalloy market can barely shake off stagnant performance in near future, but there is limited space for further price downswings as many ferroalloy producers have cut outputs. Many FeW producers have halted operation. Domestic W concentrate miners all choose production suspension as market price comes near cost line and imported resources flood in. Some ferroalloy producers keep a wait-and-see attitude after the news than preferential electricity prices have been removed and electricity prices will rise further.
As a result, less ferroalloy products will enter home market. If domestic steel market revives in late March or in April steelmakers will release steel capacity, resulting in swelling demand for special ferroalloy.
(Source: China Metallurgical News)
