In recent days, the ferrosilicon futures market has risen sharply. On June 8, 2022, the ferrosilicon closed, and the main 09 contract of ferrosilicon closed at 9902, an increase of 4.03%, an increase of 384.

The large fluctuations in the futures disk drive the spot market to gradually rise. The quotation of 72 ferrosilicon natural blocks in the spot market has risen from 8500-8600 yuan/ton to 8800-8900 yuan/ton, and the high price of qualified blocks has reached 9200 yuan/ton. Let's briefly explore the reasons for the rise in the market.

1. Influence of relevant policies of Inner Mongolia Autonomous Region

At 15:25 pm on June 6, 2022, the People's Government of Inner Mongolia Autonomous Region issued the "Notice on the Implementation Plan for Comprehensive Work on Energy Conservation and Emission Reduction in the "14th Five-Year Plan" of the Inner Mongolia Autonomous Region. The work implementation plan pointed out that by 2025, the energy consumption per unit of GDP in the region will be reduced by 15% compared with 2020, focusing on high energy consumption and high emission industries such as chemical industry, steel, non-ferrous metals, building materials, coking, coal chemical industry, etc. Implement major energy conservation and emission reduction projects.

Continue to promote the key areas of air pollution prevention and control in autumn and winter, and increase the structural adjustment and pollution control of key industries. Optimize and improve the dual control system of energy consumption. Considering factors such as the development stage, rationally determine the energy consumption intensity reduction target of each league city.

Among the energy consumption intensity reduction targets of each league city, the basic target of reducing energy consumption intensity is 18% in Ulanqab City, 15.5% in Bayannaoer City, and 16.5% in Ordos City. Among the 2025 energy-saving indicators of major industries, the comprehensive energy consumption per unit product of ferrosilicon (kg standard coal/ton) decreased from 1919 to 1900, and the high carbon ferrochrome decreased from 808 to 800.

When it comes to the ferrosilicon sector, due to the strict dual-control policy on energy consumption in Inner Mongolia in 2021, many market participants are worried about the next energy consumption policy in Inner Mongolia.

2. Tenders for ferrosilicon steel mills rise

In June, the bidding of steel mills was launched one after another. Before the Dragon Boat Festival, many steel mills finalized the bidding price of ferrosilicon in advance. The bidding prices in East China and southern regions were basically concentrated at 9200-9300 yuan / ton. Compared with the bidding price in May, the price was slightly adjusted. After the Dragon Boat Festival, due to the fluctuation of the futures disk price, the spot market price has risen, and the tender price of steel mills has also risen. After the Dragon Boat Festival, the tender price of ferrosilicon has basically reached 9350-9400 yuan / ton.

Today, Shagang Group settled 9,400 yuan/ton before the opening, and the next steel mills such as Hegang and Xinyu have not yet finalized the price. According to market news, the quotation of steel mill suppliers has reached 9,700-9,900 yuan/ton. If the high level is traded, it will form support for the spot price.

3. The cost of ferrosilicon raw materials is rising

With the implementation of electricity market-oriented transactions, the electricity cost in the ferrosilicon industry has risen to a higher level compared with 2021. The current average electricity price in the ferrosilicon market is basically 0.5 yuan/kWh, and the cost of electricity based on a unit consumption of 8,000 kWh is basically 4000 yuan / ton.

In the long run, the cost of electricity may rise in the later period, and the cost of ferrosilicon still has room to rise. Secondly, the price of blue carbon has been raised. Recently, due to the adjustment of raw coal prices in the upstream of blue carbon, the price of blue carbon in Shaanxi has been raised. 1850 yuan / ton, single ton of blue carbon increased by 200-300 yuan / ton, ferrosilicon production cost increased by 200-300 yuan / ton, and the overall production cost of ferrosilicon has basically reached 8000 yuan / ton.

4. Poor export orders and falling prices in overseas markets

With the end of the active ferrosilicon export market in March-April, overseas demand temporarily came to an end, and the inquiries received by domestic traders in May-June were not as good as before. It is expected that the export data in May-June will show a downward trend.

Overseas, the demand for ferrosilicon in India has decreased, and the price of ferrosilicon has dropped. Most of the market is cautious and wait-and-see. There are no signs of improvement.

5. The ferrosilicon market supply is still at a high level

According to a sample of 136 independent ferrosilicon enterprises in the country according to Mysteel statistics on June 2: the operating rate (capacity utilization rate) nationwide was 54.37%, an increase of 2.18% over the previous issue; the average daily output was 18,156 tons, an increase of 140 tons over the previous issue;

National ferrosilicon production (weekly supply): 127,000 tons. Judging from the current daily production, the output of ferrosilicon in June will still be around 540,000 tons.

On the manufacturer side, this week (6.2) Mysteel counted a sample of 60 independent ferrosilicon enterprises across the country: the national inventory was 49,300 tons, an increase of 7.59% over the previous issue.

In terms of delivery warehouses, the inventory of delivery warehouses is around 63,000 tons before the festival, and around 61,000 tons after the festival. The inventory is slowly declining. However, with the rise in disk prices in the past two days, there will be more opportunities for futures. It is expected that there will be a lot of silicon The iron will be sent to the delivery depot.

On the whole, the demand for ferrosilicon spot market is relatively general, and the bidding demand of steel mills in June has not yet been released. The delivery deadlines of mainstream steel mills’ bidding are basically at the end of June and July, indicating that steel mills have relatively abundant stocks and tight stocks. Most of the steel mills have basically completed their purchases in the early stage. The rise in futures prices will inevitably lengthen the steel recruitment cycle in June, and many steel mills will choose to postpone their purchases.

At present, the rise of ferrosilicon market price mainly follows the fluctuation of the disk, the transaction has not yet kept up with the rhythm of futures, the price of metal magnesium is down, overseas orders are general, and the support of the overall demand for ferrosilicon is insufficient, especially in the main producing areas where there is no new trend in the policy Under the premise, ferrosilicon continues to have insufficient upward momentum, and market participants mainly wait and see;

Waiting for the bidding price of HBIS to give the market a direction, and according to the quotations of suppliers, the bidding price of HBIS may not exceed 9,700 yuan/ton. After the direction of the steel bidding is basically finalized, the follow-up market situation of ferrosilicon is mainly on the futures side. The trend has become an important factor affecting the price of ferrosilicon.