China: Ferro silicon prices edge lower w-o-w as cost support fades

• Producers adopt competitive pricing to move volumes
  
  
• Spot trading remains muted amid uncertainty
  
  

Ferro silicon (Si:75%) prices in China edged down by RMB 140/t ($21/t) w-o-w to RMB 5,900-6,090/t ($869-897/t) exw, inclusive of taxes. Meanwhile, Si:72% prices also inched down marginally by RMB 50/t ($7/t) to RMB 5,450-5,550/t ($802-817/t) exw.

China's ferro silicon prices softened further this week as lower raw material and power costs, coupled with ample supply from capacity expansion, weakened market support. Off-season demand, rising inventories, bearish futures, and cautious buying continued to pressure prices and trading activity.

Market updates

Weak cost support weighs on prices: Lower raw material and electricity costs continued to erode production cost support, prompting producers to lower offers. Meanwhile, ongoing capacity additions and the absence of large-scale production cuts kept market supply comfortable, with rising inventories reinforcing the bearish supply-demand balance and weighing on prices.

Sluggish demand limits recovery: Downstream demand remained subdued as the industry entered the seasonal off-peak period. Steel mills largely completed monthly procurement and limited purchases to immediate requirements, while magnesium plants maintained cautious buying. Weak restocking interest, coupled with bearish futures sentiment, kept spot trading muted and continued to pressure prices.

Outlook

Domestic ferro silicon prices are likely to remain under pressure in the near term amid ample supply, weak demand, and soft cost support. While production cuts and higher electricity costs may lend some support later, any recovery is expected to be gradual and limited.

With inputs from CBC