Ferro Silicon is known to possess good resistance to abrasion and corrosion.
Almost all Ferro Silicon is consumed in steelmaking and cast-iron industry. It is used mainly as a deoxidizing or reducing agent, in the production of stainless steel, and in the alloying of steel and cast-iron foundries.
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Prices of Indian ferro silicon has been a hot topic since the start of the year, having tripled from a year ago and is currently being traded at around 240-250 thousand rs/t.
Let us look at the factors that triggered such a price rise:
The Indian market is prominently dependent on imports for ferro silicon, particularly from Bhutan. Thus, the prices started escalating as Bhutan went under lockdown and the supply shrank.
Meanwhile, since Mar'21, Meghalaya faced unprecedented power cuts impacting supplies from the region. Thus, the lockdown in Bhutan and supply issues in Guwahati not only increased prices but also created panic about procuring material. Meanwhile, various parts of the country came under lockdown subsequently as second phase of Covid hit India, which disrupted the material flow.
In August, prices started stabilizing at INR 125,000 levels, but September saw China experiencing severe production cuts for ferro alloys.
As far as ferrosilicon is concerned, the commodity comes with a huge power requirement of around 8500 units for manufacturing 1 ton of ferro silicon. Thus, China, due to its dual control policy of emission and energy control, has curbed production by 12% m-o-m in Sep, leading to panic in the market.
Meanwhile, imports from countries other than Bhutan have suffered due to compulsory BIS Quality conformation deadlines. Amidst rising freight costs and container unavailability, prices in international markets have spiked.
Global production is also suffering, as the commodity being power intensive in nature, production is largely curtailed in many countries, including China, on rising gas and coal prices. It is expected that the domestic market might also see a surge in the power costs soon, while power availability could also remain uncertain.
The Indian market is now solely dependent on Bhutan and the domestic supplies for consumption as imports are out of question.
Meanwhile, many major ferro silicon units in European countries are experiencing production cuts, which could impact demand for exports from India.
To sum up, the year 2021 might just turn out to be golden year for ferro silicon producers. With the approaching winter season in China, and coal shortage in that country, it is highly unlikely that prices will come down soon.
Негізгі бет Ferro Silicon Analysis: Dramatic Rally & Short term Outlook
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