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Chinese market sentiment deteriorates ahead of holiday break Chinese ferro-silicon prices dipped on the back of weakening sentiment, as traders and buyers alike opted to start purchasing only after China’s week-long National Day holiday. Both suppliers and traders have been gradually reducing their offers to entice buyers as they anticipate that spot prices will continue to decline moving towards end-October.
Several Chinese producers noted they were reluctant to slash prices ahead of the country’s week-long National Day holiday as they did not want to risk moving ahead of the spot market.
Chinese producers and traders told Metal Bulletin of offers ranging from 5,500-6,450 yuan ($828-970). Metal Bulletin discarded offers reported at 5,500 yuan as these offers were deemed to be outliers and not readily available to the spot market at large.
“The steep cut in offers is primarily from the smaller trading houses who are desperate to get rid of excess inventory. These offers are not representative of the spot market as the volume is too small,” a Chinese producer said.
China’s domestic spot price for ferro-silicon basis 75% silicon dipped to 6,000-6,450 yuan per tonne on Friday September 29, down 2% from 6,200-6,500 yuan per tonne a week before.
Most Chinese producers and traders were quoting offers within the price range assessed by Metal Bulletin on Friday.
Meanwhile, Hesteel (Hebei Iron & Steel) set its October tender price for ferro-silicon, 72% Si min, at 6,400 yuan per tonne on delivered basis, which equates to approximately 6,100 yuan on an ex-works basis, according to multiple market sources.
On the export front, Chinese producers were understood to be willing to lower offers. Firm offers were reported to Metal Bulletin in the range of $1,300-1,350 per tonne fob China, down from $1,350-1,400 on September 22.
“The export market is extremely messy this week, with a wide range of offers on the fob front. It is a sign of sellers panicking. For us, we chose to maintain our offer at $1,340 per tonne fob China as we are managing our stockpiles well,” a second Chinese producer said.
European suppliers cut offer prices The European ferro-silicon market dropped this week as a lack of business for prompt delivery encouraged lower offer prices.
The move pares gains made the week before when consumers in the steel sector bought ferro-silicon for prompt shipment at higher prices despite reports of lower-priced deals through the next quarter.
European ferro-silicon prices moved down to €1,400-1,500 ($1,647-1,765) per tonne in the past week, from €1,410-1,525 per tonne previously.
The market has seen deals done around €1,500 per tonne in southern Europe, particularly in Spain, this month, with lower-priced trades close to €1,400 per tonne in northern Europe.
However, longer-term weakness may be evident on a spot basis in October, with reports of one deal for 100 tonnes done at €1,390 per tonne on call through the next quarter. Moreover, there is industry talk of consumer deals on a quarterly basis as low as €1,300-1,350 per tonne from October.
A clearer direction on the prompt market should be seen in the early weeks of October, sources said.
US fourth-quarter negotiations increasingly aggressive The US ferro-silicon market slumped further in the past week while traders and suppliers offered more aggressively during some fourth-quarter negotiations. US spot prices for ferro-silicon declined to 95-103 cents per lb on September 28, down 2.9% 99-105 cents per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.
Fourth-quarter negotiations picked up where they left off in the previous week, with suppliers offering increasingly aggressive numbers to secure tonnages. “Spot opportunities have been few and far between, so it’s clear some suppliers were willing to lower prices and take profits after being signalled weakness from the Chinese markets,” a supplier source said to AMM.
The market low was established by one particular mill negotiation which experienced high levels of competition, as market participants noted a slower-than-expected demand pace heading into the fourth quarter.
Price volatility in the global market in recent months has led mills and foundries take a more cautious purchasing approach, sources said.
“I think consumers are still feeling things out. Some people aren’t sure they will need to buy in the fourth quarter, but I have a feeling we will see more demand before the year is out,” a second supplier source said.
Market participants expressed uncertainty regarding demand moving forward, citing concerns of increased steel imports amid delays in the US Department of Commerce’s Section 232 trade case.
“It seems as if 232 has been set aside until next year at this point, so we might start to see more imports flooding in and utilisation rates might start to drift. There is a lot of uncertainty regarding what to expect demand-wise through the end of the year,” a third supplier source said.