Taiwan FeCr tenders the new benchmark

The Taiwanese ferrochrome tenders for the fourth quarter have added significance. Buyers and sellers are anxiously awaiting the delayed outcome, with the mills now also sending their RFQs for medium and low-carbon ferrochrome before the charge chrome tender is finalized.

Analysts say the Taiwanese tender should significantly impact the Glencore’s fourth-quarter benchmark. If the Taiwanese book at under 90¢, the benchmark has to take a significant fall. As one European stainless mill buyer said: “It’s bad enough for us when the Chinese are 40¢ per lb under our price, but if the Taiwanese get that large of a price break it would destroy our business.”

New US duties on Chinese alloys, much to do about a very little, boost to the US government

US sellers of Chinese ferroalloys were renegotiating their sales contracts with consumers after the US government finalized its duty of 10% for most alloys through the end of the year. Most sellers were able to pass on the increase while others were splitting the difference. However, the 10% duty, according to both buyers and sellers is “manageable” and won’t cause any hardship.

“All the other importers will raise their prices so it will be a wash,” one seller said. Buyers admitted that the 10% increase will have a minimal effect on their sales price to their consumers. “The increase will result in a 1-2% increase tops,” a consumer admitted. “It won’t be a factor in our business but at 25% it will give me pause.”

Overlooked in the US government’s tariffs in the positive effect it has on revenues. The new duties will provide a SIGNIFICANT boost to the US Treasury and will provide a new revenue stream. One company said it has never sent as much money to Customs ever as a result of the duties. So, as long as US consumers aren’t inconvenienced by paying slightly more, expect the duties to last a LONG time

European FeV price hits $100 per kg

A salesman at one major FeV producer was told not to offer FeV below $100 per kg early in the week. One of his competitors today reported a sale in Europe at $100, remarking, “This time it is not a bubble. It is fundamentally based.” He remarked that there is little FeV coming out of China, and there will be even less going forward as the new regulations requiring more vanadium content in Chinese rebar go into effect on Nov. 1.

China began its ban on imports of vanadium slag from Russia on Sept. 1, 2018. China told the World Trade Assn. a year ago that it would ban imports of several items it considered hazardous waste including vanadium bearing slag and also spent catalysts. Industry sources believe that the ban on slag imports was more an attempt to prop up Chinese FeV producers than a response to environmental concerns. Even so, it is likely to affect Chinese FeV output.

Whether the new rebar standards will boost Chinese vanadium consumption significantly is up for debate. “About 20 years ago, the Chinese were supposed to improve the rebar specs because buildings were collapsing, and they just ignored the revised regulations,” said a source.

Vanadium pentoxide and US FeV prices continue to lag FeV prices in Europe. V2O5 is quoted at $19-20 per lb (which translates to a FeV price of $81-85 per kg) while US FeV prices are just over $40 per lb.

AMG snags two-year, 7-million lb V contract

AMG Vanadium has entered into an agreement to supply 7-million lb of vanadium to a US steel producer over a two-year period, starting Jan. 1, 2019, according to an announcement by AMC Advanced Metallurgical Group. Market sources believe that the contract is with Nucor to supply at least 11 plants that can use 50% FeV. Nucor issued an RFQ for 2019 in late July seeking slightly less than 5.3-million lb for 19 plants of which seven can take only 80% FeV. (AMG does not produce 80% FeV).

What is surprising about AMG’s announcement is that it was able to secure a two-year contract. It is unusual for a US mill to commit to more than a year. “This just shows that consumers are concerned about supply availability,” said a source. “I think it is a smart move because at this time, AMG is really the only producer in the US.” Bear Metallurgical is doing a small amount of conversion. Plans to restart the former Gulf Chemical catalyst recovery plant in Freeport, TX, by early 2019 are not reassuring to steel mills. Masterloy in Canada is converting FeV, but heavy demand in China and Europe is drawing material away from the US market.

The two-year supply agreement means that a major portion of AMG’s FeV is committed. It is assumed that AMG sold the FeV on a formula that locked in the discount off a published price for two years. This year, most formulas called for a 3.5% discount. Market sources had expected the discounts to be smaller given tight market conditions.

“The AMG contract is good news for us,” said a seller. “It sends a signal that AMG is not going to be undercutting anyone in the market because it has locked up so much of its output, and if AMG did manage to get the same discount for both years, that also should prevent the market from cratering.” For many years, discounts were double digit.

Detailed and comprehensive review of the Chinese silicon metal and polysilicon markets, part 1

The silicon conference now taking place in China has provided wonderful overview of the industry. The Chairman of the Silicon Industry Branch of China Nonferrous Metals Industry Association Zhao Jiasheng delivered a paper, “ Current Status and Development Trend of China’s Silicon Industry in 2018, which detailed the country’s silicon and polysilicon industries.”

According to Zhao Jiasheng, since 2018 China’s silicon industry has shown increased output but the growth rate of demand is less than expected resulting in price fluctuates and declining profitability.

Although the silicon industry is facing a series of problems and problems such as weak phased demand, unbalanced structural supply and demand, and frequent international trade disputes, the future development of the silicon industry will be supported by the state’s support for the development of new materials and new energy industries.

In the first eight months of 2018, China’s industrial silicon prices rose first and then declined, and the overall trend showed a downward trend. Among them, the average price of 553 silicon was rmb12,408 per mt, down 2.3% year-on-year; the average price of 441 silicon was rmb13,448 per mt, down 2.7% year-on-year.

Since March, industrial silicon prices have continued to weaken. By the end of August, the average price of 553 and 441# was rmb11,850 and rmb12,550, respectively, which was 9.8% and 13.2% lower than the price in mid-March.

The main reasons are: new capacity in Xinjiang is gradually released, and supply has increased; demand growth in downstream aluminum alloys and organic silicon has weakened, not as expected, especially polysilicon; the exchange rate market volatility increased, which had a certain impact on exports; finally, the price of industrial silicon raw and auxiliary materials declined compared with the second half of 2017.

According to the statistics of the Silicon Industry Branch, China’s industrial silicon production in the first half of 2018 was 970,000 mt, an increase of 10.23% year-on-year, a record high for the same period. Xinjiang, the region with the largest industrial silicon production, produced460,000 mt in the first half of 2018, accounting for 47.4% of total domestic production, up 21.05% year-on-year.

Yunnan’s production in the first half of the year was 155,000 mt, accounting for 16% of total domestic production, an increase of 3.33%. The increase in production in Xinjiang is mainly due to the smooth operation of the first phase of the Heshun Silicon Industry Shanshan Plant; the increase in production in Yunnan is mainly from Hongsheng Jinmeng Silicon.

Sichuan’s production in the first half of the year was 105,000 mt, accounting for 10.8% of total domestic production, down 4.55% year-on-year. As a province that produced industrial silicon earlier, Sichuan Province has gradually risen in Xinjiang in recent years and the price of some raw and auxiliary materials has risen rapidly. Under the support of no small hydropower price advantage, some silicon enterprises have taken the initiative to reduce production. The output of Sichuan Province showed a slight shrinkage.

On the positive said the continued strong environmental supervision in the second half of the year will boost costs and promote the sustainable and healthy development of the industry. Second, continuous supply-side structural adjustment (elimination of backward production capacity) and limited new capacity will help ease the contradiction between supply and demand.

Finally, the price is close to or lower than the production cost of most enterprises, and the company’s active production cuts in response to falling market prices will also effectively support market prices.

Detailed overview of Chinese polysilicon market, part 2

By the end of August 2018, domestic polysilicon production capacity totaled 294,000 mt, and 16 production enterprises (including branch maintenance companies) had a production capacity of 215,000 mtpy, and the production capacity for shutdown was 79,000 mtpy. The capacity of the non-resumption plan is about 54,000 mtpy, accounting for 18.4% of the total capacity.

In the first eight months of 2018, domestic polysilicon production totaled 174,800 mt, of which the average monthly output of domestic polysilicon in January-May was 24,300 mt. From June, the output began to decline month by month. The output in August was only 15,700 mt, compared with the previous five months. The average production fell by 35.4%. As of the end of August, there are still nine companies still in the process of overhaul.

The entire polysilicon industry is moving to the low-cost regions of western China such as Xinjiang and Inner Mongolia. It is expected that by the end of 2018, the effective production capacity of polysilicon in Xinjiang will exceed 140,000 mtpy, accounting for 39%; the effective production capacity of polysilicon in Inner Mongolia will exceed 60,000 mtpy, accounting for more than 17%. At present, the comprehensive cost of new polysilicon enterprises in the western region can be controlled at rmb60,000 per mt, which will further enhance the competitiveness of domestic polysilicon enterprises.


Chinese graphite electrode prices off highs

Chinese prices for graphite electrodes are will off their highs of around rmb35,000 per mt and are now around rmb17,000 based on better availability. Still the new prices are well below the rmb7,000-8,000 of early 2017.

China to cut import tariffs, but not on US products

China fired another shot at the US, but indirectly. Premier Li Keqiang said the country will cut the average tariff rates on imports from the majority of its trading partners–obviously not including the US–as early as October.  Li Keqiang, however, ruled out using the yuan and a weapon and won’t devalue its currency.

Teroerde forms new Pittsburgh-based company

Mark Teroerde has launched his new venture, Conexus Metals. Conexus will focus on stainless and special steel raw materials, including nickel alloys, primary nickel, ferronickel and concentrates. Conexus will also be the exclusive supplier from ArrowMetals Trading in Switzerland which in turn will be the exclusive supplier of Dominican Falcondo and Macedonian Euronickel to the US. The company will be based in Pittsburgh.

Chrome prices are up but don’t get too excited

Prices for UG2 in China got as high as $167 per mt this week based on increased domestic ferrochrome production as environmental restrictions eased. But with the winter pollution months coming up, expect less ferrochrome production. Also the higher ore prices will ensure that shipments of chrome ore to China won’t let up.

As for charge chrome, 13,000 mt of imported material was sold this week in China at rmb7,150 per mt while some sellers were attempting to push prices up much higher. However, the major Chinese stainless mills already purchased their fourth-quarter ferrochrome, leaving only small spot sales available.

Even though Indian producers were quoting higher prices, one mill purchased at 82-84¢ last week.

Western mills are starting to think about not only the fourth quarter by also 2019 though economic uncertainty is definitely hampering talks. Also, sellers and buyers were wondering the effects of the regime change at Glencore when Stuart Cutler leaves as head of the company’s ferroalloy unit.

“Hopefully Glencore will take a long hard look at its quarterly benchmark system, but I don’t expect any change in the fourth quarter,” one supplier said.