China's special ferroalloy market remains weak despite the fact that March is usually the traditional peak season for the steel market. Industry analysts forecast that the sluggish performance will continue in the short term and the price will fall further though at a slower rate than at present.
The price for FerroMoybdenum price fell to CNY 110,000 to 112,000 per tonne with some transactions price falls at below CNY 110,000 per tonne. Steelmakers' purchase prices are CNY 105,000 to 107,000 per tonne, down CNY 3,000 to 5,000 per tonne from the previous level.
The Prices for Vanadium-series alloys have also fallen. 50 FeV is now offered at CNY 103,000 to 108,000 per tonne with a spot price of CNY 102,000 to 107,000 per tonne down CNY 2,000 per tonne. Ferrotungsten (FeW) has slipped to CNY 118,000 to 120,000 per tonne with the lowest transaction price hitting CNY 105,000 per tonne a fall of CNY 3,000-5,000 within a week.
Traders and analysts believe the weak market attributed to the following factors:
1. Due to a fluctuating steel market, demand remains insufficient. Stock of V-contained high strength third-grade rebar has reached 250,000 tonnes in Shanghai. Stainless steel, which consumes large amounts of ferroalloys, has also witnessed a stagnant operation for a long time. The stainless steel price lost another CNY 500 to 600 per tonne this week. Besides, the high quality and special steel markets appear bleak owing to waning demand from downstream manufacturing industries. Steelmakers are mainly consuming their inventory at the moment and keep a cautious attitude towards special ferroalloy purchasing. Some plan to buy FeMn in mid- and late-March. Some end-users still hold a fence-sitting attitude and are not enthusiastic in purchasing.
2. Traders are not active in sales. As the whole ferroalloy market is weak, traders aren't confident in the future market and mainly hold a wait-and-see attitude. Some traders have been clearing out stocks in order to accelerate capital reflow.
3. Gloomy international markets are also affecting the domestic market. The steel sector has been severely impacted by the global financial crisis and steelmakers have all reduced their steel output, leading to a shrinking demand for ferroalloys. 75% FeW price has slid to USD 27 to USD 28 per kilogram from USD 29.5 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 to USD 23.5 per kilogram, down by USD 1 per kilogram. A 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 January collapsing from the 1,068 tons last January. FeMo exports started to shrink last November. Figures recorded 99.5 tonnes in November 229.6 tonnes in December and almost zero in January.
Insiders point out that given waning domestic demand, interrupted exports and increasing imports, the domestic market faces growing pressure. The special ferroalloy market can barely shake off its stagnant performance in the near future, but there is limited space for further price falls as many ferroalloy producers have cut their output. Many FeW producers have halted operations. Domestic W concentrate miners have suspended production as the market price comes near to the cost line and imported resources flood in. Some ferroalloy producers keep a wait-and-see attitude after the news that preferential electricity prices have been removed and electricity prices will rise further.
As a result, less ferroalloy products will enter the home market. If the domestic steel market revives in late March or in April steelmakers will release steel capacity, resulting in a swelling demand for special ferroalloys.
Source: Steel Guru
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