I mentioned last time that ferrosilicon and silicon manganese have continued to rise due to the event that Malaysia's OM Sarawak plant has been shut down indefinitely amid an increase in corona infections, and  power restrictions in the Ningxia area of ​​China. (→ Ferroalloy market status 2021 # 9 How far will the most terrible ferrosilicon continue to rise?) However, there has been no change in the tight business situation since then, and domestic blast furnace and electric furnace manufacturers are getting frustrated. Currently they do not ever get the prospect for acquiring sufficient spot materials . The whereabouts of the SPOT tender of ferrosilicon that will be held within this June gathers a high attention. If not enough materilas there, it could have a serious impact on summer operations.

 

 

As mentioned before, the supply side conditions of ferrosilicon are…

 

　Russia ... Already full of contracts and no spare capacity.

　Malaysia ・ ・ ・ depends on how soon OM resumes operations

　Kazakhstan ・ ・ ・ YDD, etc. has limited supply capacity and no spare capacity

　Brazil: There is a limit to the supply capacity and there is no spare capacity

　China ... opaque

 

 

In such a situation, first of all, the question is when the Malaysian OM will resume operations, some is said to indicate that it will resume operations in about two weeks, but in OM Sarawak, with more than 40 people infected with corona an order to suspend operations has been issued. For resuming, it is strictly required a condition that no one is infected any more.

 

Malaysia itself has entered lockdown (until 14th, but there is a high possibility of extension), and it seems difficult to substantially resume operations until at least the end of June.

 

The domestic electric furnace/blast furnaces and affiliated trading companies are desperately requesting Russia for supply, but the situation does not seem to be good to secure any supply. I hear that the blast furnace makers are also secretly tending, but they are not gathering at all. I hear also that it is physically difficult to procure any with higher prices. The same is true for Brazil. The serious impatience of the blast furnace and electric furnace manufacturers can be seen from the fact that they are also touching high-quality ferrosilicon (special ferrosilicon used for electrical steel sheets, etc.) manufacturers that they would not normally order. However, the special ferrosilicon maker has no spare capacity. Really they do not have any SPOT. By the way, in China, such special ferrosilicon has already exceeded $ 3,000 tons and has risen to a record high. 75% ferrosilicon is already over $ 2000.

 

From China as the last resort, they haven’t received a good response so far, so it seems that the trading companies that handle it are literally looking for frantically, but the result is utterly hopeless. In short, there is no the prospect.

 

 

Ferrosilicon market price transition (75% Si USD / ton FOBChina) 3 months

graph

 

 

It seems that some special steel makers were procuring special ferrosilicon for $ 2,500, which was expensive at the time, by buying futures, but this time it has been successful. This is a good example of the fact that when the market moves violently, the earlier secure raw material the better comes the result

 

In particular, ferrosilicon, an item that does not stop once it catches fire, is a place where the sense of raw material purchasing is critical, and although it was once a kind of bet, it was also possible to take a step first and secure a drastic inventory once upon a time. However, such dynamic purchasing is not allowed in the Reiwa era when such discretion is not workable amid compliance required strictly.

 

However, in the current rough sea torrent market, it is a fact that risk cannot be avoided at all with such a wage-earner-like or civil servant-like stance, and it is said that taking no risk is a risk, but in fact many Japanese companies have got accustomed with taking no risk, so they can't cope with the sudden changes like now. I can't say what the consequences will be, but if procurement fails even from China, there is a possibility that the production of steel will be unavoidably reduced due to the lack of ferrosilicon, just as the production of automobiles was reduced due to the lack of semiconductors.

 

The only salvation is that the Olympic Games will be forcibly held, so each electric furnace company will carry out maintenance ahead of schedule in late June. Therefore, although the consumption of ferrosilicon can be suppressed to some extent, like water dropping on burning stones. As mentioned above, if they don't enough the bids at the spot tender within this month, hey will see a very difficult summer operation.

 

However, there is a "track record" that a ferrosilicon tender made by a Korean electric furnace maker last month had no bid, and now it is even more difficult to supply ferrosilicon, so even Japanese tenders will be end completely out of order with a high possibility. When that happens, the summer of tension and the summer of crisis will come.

 

 

(IRuniverse YT/translated by S. Aoyama)