The law of unintended consequences was exercising control over the ferrosilicon market. After the ZCE moved to stop undue speculation today, it had the negative affect of INCREASING SPECULATION. With investors finding the ZCE setting trading limits and temporarily banning at least one trader, speculators fled the exchange and moved into the non-terminal markets. This resulted in an incredible jump in free market prices and a wide gap between the ZCE and free market prices. Basically putting dynamite into a fire.
As the thirst for high profits took charge, the buying frenzy increase and spread beyond the Chinese market. OMH, the only publicly traded Asian Pacific company with a ferrosilicon component, saw its share price spike.
Non-Chinese ferrosilicon smelters were wondering if they should offer a portion of their production into the Chinese market, possibly to the detriment to their long-term non Chinese buyers. If they do there will be a mad rush by traders and consumers to secure ferrosilicon, adding to the shortage mentality.
The facts are pretty straight forward. The smelters will be closed for at least a few months, but other Chinese smelters in other provinces have not been affected for the moment. However, if traders start taking positions and consumers hurriedly increase their ferrosilicon inventories the price spike will be more prolonged.