Bulk ferro-alloy prices in Europe have fallen on slim demand and oversupply as buyers returned to the market after the summer break for smaller amounts than expected.
Prices for ferro-manganese, silico-manganese and ferro-silicon have fallen this month as some steel mills continue to operate at reduced capacity, under pressure from imports and low demand.
High-carbon ferro-manganese prices fell to €920-1,000/t delivered duty paid (ddp) yesterday, down from €960-1,040/t ddp on 2 September. Most steel mills in recent years have returned to the market in the first week of September.
Medium-carbon ferro-manganese prices stood at €1,350-1,400/t yesterday, down from €1,425-1,525/t ddp on 2 September. Silico-manganese prices fell at the low end of the range to €900-980/t ddp, down from €920-980/t on 2 September, having been stable in that range for most of the summer. Ferro-silicon prices fell to €920-980/t ddp, down from €930-1,000/t on 2 September.
Many consumers of bulk alloys avoided the spot market because material delivered under long-term contracts fulfilled their raw material needs. Some consumers have been rejecting deliveries of contract material because they have reduced output of their products.
Producers and trading firms were forced to reduce offers to generate sales. But one of the largest European ferro-alloy producers has sharply reduced its prices to generate cash and raise sales, undercutting the market. The company is offering below the spot price range for most bulk alloys. It does not produce ferro-chrome.
Ferro-chrome sellers unable to offer lower prices
The European ferro-chrome market has bottomed out in recent weeks. Prices for high-carbon alloy rose to 80-86¢/lb ddp on 24 September, up from 76-86¢/lb on 2 September. But prices are unlikely to rise further because of slow demand from stainless steel mills. Low-carbon alloy prices have fallen to the lowest point since May 2008 at $1.65-1.75/lb ddp. The quarterly benchmark for European 52pc charge chrome for the fourth quarter settled at $1.02/lb, down from $1.04/lb in the third quarter.
Conversely, ferro-chrome prices are unlikely to fall because suppliers in South Africa and India are unable to offer to Europe at lower prices. Indian material was sold in Europe this week at 77¢/lb ddp, but traders said they could not restock with material from India at this price because of rising ore prices in the country.
South African suppliers rejected offers below 80¢/lb cif Rotterdam because power prices in the country have increased in recent years. South African utility Eskom raised its tariffs by an average of 18.2pc between 2008-09 and 2016-17.
Steel producers under pressure from Turkish imports
Demand for bulk ferro-alloys from the European steel market has decreased this year on falling European steel production. Steel output in the EU was 98.18mn t from January-July, down by 2.4pc from 100.6mn t in the same period a year earlier. EU steel producers have struggled to maintain market share because of steel imports from countries like Turkey, Russia, China and South Korea.
Turkish material in particular has weighed on the EU steel market. The lira crisis and subsequent economic downturn reduced demand for steel in Turkey's domestic market and EU buyers became a safety valve for Turkish steel producers. EU steel imports from Turkey rose to 4.21mn t in January-July, up by 22.75pc from 3.43mn t in the same period in 2018. EU steel safeguards in the form of quotas, which began in February, have had little effect.
Overall imports into the bloc from outside countries rose by 5.7pc to 17.76mn t in the first seven months of 2019. Imports from steelmakers in Asia-Pacific rose because of US section 232 tariffs on foreign steel, which diverted low-priced steel from Asia-Pacific towards Europe.
Prices for bulk alloys could continue to fall in the fourth quarter. There are no new measures on steel imports to the EU and Turkish steel prices continued to fall during the summer, pressuring European steel prices. Some estimates say EU blast-furnace steel mills are losing as much as $100/t on hot-rolled coil.
