Lacking positive catalysts, sentiment in the ferrous metals sector weakened during trading, dragging both silicon iron and manganese silicon futures prices down after initial gains. Today's main silicon iron contract settled at 5,620 yuan/ton, down 0.71% from the previous session, while the main manganese silicon contract declined 0.51% to 5,856 yuan/ton.
On the demand front
Last week's Mysteel survey of 247 steel mills showed a profit rate of 39.39%, down 1.3% week-on-week. Daily pig iron output averaged 2.2798 million tons, decreasing by 0.12 million tons from the previous week. Additionally, electric furnace production profits contracted, with more plants halting operations for maintenance. Overall, both long and short process steel mills maintained low operating rates, weighing on sentiment for raw materials like ferroalloys. However, a new round of alloy tenders is now underway, providing decent near-term support for dual-silicon demand. The key focus moving forward will be the trend in steel mills' molten iron output.
On the supply side
Last week's Mysteel survey showed a 36.21% operating rate among national silicomanganese enterprises, unchanged week-on-week. The operating rate for independent ferrosilicon enterprises nationwide was 29.12%, up 0.03% week-on-week. Market sentiment remains cautious, with alloy plants generally maintaining stable operations and production at relatively neutral levels. From an inventory perspective, ferrosilicon stockpiling rates are currently healthy, showing no signs of significant supply-demand imbalances. However, manganese silicon inventories remain elevated, potentially exerting some downward pressure on futures prices.
Regarding manganese silicon costs, manganese ore market sentiment has risen alongside overseas markets, with spot manganese ore quotes remaining relatively firm. Current manganese silicon cost support is strong, favoring bullish futures price movements. For ferrosilicon costs, the Shenmu coke market remained stable today, with medium-grade coke quoted at 760-780 yuan/ton and small-grade coke at 735-750 yuan/ton. Coal prices at the raw material end remain stable, suggesting coke prices will likely hold steady for now. Current cost support for ferrosilicon persists, with coal and electricity prices warranting close monitoring moving forward.
Overall
The supply-demand dynamics for alloys show little change, and cost support remains relatively firm. Futures prices are more likely to follow sector sentiment fluctuations. Everbright Futures views suggest both silicon and ferrosilicon face some sentiment-driven turbulence, with limited fundamental drivers. Adopt a range-bound approach and monitor shifts in market sentiment.
Translated with DeepL.com (free version)
