[Ferro-Alloys.com]

[Spot Market] In the first half of 2023, the domestic ferrosilicon market weakened as a whole. With the prices of major raw materials such as electricity and semi-coke declined, it lacked of support on the cost side; The downstream demand side was also operating poorly, with low purchasing enthusiasm, the inventory of ferrosilicon in steel mills has decreased from 24 days in the fourth quarter of 2021 to 16.5 days in the second quarter of 2023, setting a new low in recent years; The Futures market was constrained by the steel tender price, and the overall trend was downward. The profits of ferrosilicon production have been continuously compressed. Although there have been continuous maintenance, production reduction, and resumption actions in the production area, inventory was still high, and the removal was slow. Manufacturers had a strong willingness to make deals, and prices have dropped again and again.

However, although domestic short-term production cost support for ferrosilicon was weak and overseas macro highly uncertain, ferrosilicon manufacturers were very rational and had strong industry self-discipline. In the short term, production would mostly remain low, and there was little possibility of a significant increase in production; At the same time, with the sustained recovery of the Chinese economy and the gradual implementation of relevant policies, the construction of infrastructure was steadily growing, and the market still had expectations. There were structural upward opportunities for the ferrosilicon industry in the future. Especially since June, the ferrous series has rebounded continuously, and steel mill profits have been repaired. Although steel consumption was limited in the traditional off-season, the announced performance of July steel tender has not changed much compared to June, it was expected that following downstream demand for ferrosilicon would enter a stable period.

[Export Data] According to data of China Customs, from January to May 2023, China exported 186875.72 tons of ferrosilicon (containing by weight more than 55% of silicon), a year-on-year decrease of 154134.45 tons or 45.20%; From January to May 2023, China exported 11484.33 tons of ferrosilicon (containing by weight ≤55% of silicon), an increase of 814.959 tons year-on-year or 7.64%.

[Futures Market] The opening price of the 2309 main contract in June was 6,940, the highest price was 7,304, the lowest price was 6,856, the closing price was 7,076, the settlement price was 7,160, the trading volume was 2,511,758, and the position was 160,612, an increase of 2.11%.

Domestic Steel Mills Tender Prices – July, 2023

[Steel Market] Around the Spring Festival in January, 2023, downstream steel mills saw an increase in maintenance and production reduction, resulting in a weakening of actual steel demand, weak market transactions, poor sentiment, and seasonal accumulation of inventory; The February period saw a first decline and then an increase in steel rebar Futures prices, providing some support for spot goods. Both the supply and demand sides improved, while the raw material side operated relatively firmly. However, the inventory pressure remained high; The performance of the domestic steel market in March was under-performing, with a cold trading atmosphere and poor factory performance; In April, the price of steel rebar decreased by more than 10%. On May 26th, the lowest price of steel rebar Futures was 3388 CNY/T, breaking a new six-month low. In addition, the procurement cost of raw materials for steel mills decreased significantly month on month in May; Entering June, the ferrous series has rebounded continuously, and steel mills' profits have been restored. However, in the traditional off-season, it was possible that there would be fluctuations. According to the data of the National Bureau of Statistics, from January to May, the total profit of Ferrous smelting and calendering industry lost 2.1 billion yuan, turning from profit to loss year on year. At the same time, the total PMI index of the steel circulation industry in June was 49.6%, an increase of 1.8 percentage points from the previous month, and continued to rebound within the contraction range; The sub index showed that the release of demand has increased, sales have continued to rebound, cost support has become stronger, purchasing willingness has increased, and the industry has continued to recover.

[Metal Magnesium Market] In January 2023, the domestic magnesium metal market steadily started, but after the resumption of the Spring Festival, it was in the shadow of weak downstream demand, average transaction volume, and poor export situation, gradually increasing inventory pressure, and gradually lowering quotations; In March, the market was still shrouded in sluggish sentiment, with prices dropping below 20000 CNY/T; In the first half of April, under the influence of news on the transformation of the semi-coke and metal magnesium industry in the Fugu region, the domestic metal magnesium market violently driving up. The quotation increased from around 20500 CNY/T at the beginning of the month to the highest of 30000 CNY/T in the middle of the month, but then returned to rationality; In the first half of May, influenced by the policy of phasing out and dismantling semi-coke plants in the Fugu region, the domestic magnesium price once again significantly increased, breaking through the 30000 CNY/T. However, due to relatively weak downstream demand, the supply-demand contradiction still existed, and it was difficult to close at high prices. Some factories have lowered their prices in order to win orders; In June, the fluctuation range of magnesium prices narrowed. There was a strong sense of competition between the supply and demand sides. At the end of June, the mainstream ex-factory cash quotation including tax of 99.9% magnesium ingots in Fugu area was mostly around 20500-20600 CNY/T. Despite the unchanged oversupply pattern and the lack of positive support, the short-term magnesium market was still difficult to be optimistic, and we should pay attention to changes in the supply and demand relationship.

• [Editor:kangmingfei]