Current status
Recently industrial chain reaction, steel demand is insufficient risk is high, the industrial chain may once again into the negative feedback phase, ferroalloy future risk of falling demand. However, the early stage of the production gradually rehabilitation -arc furnace, ferroalloy supply quick rebound, the price of all previous supply support waning, excess supply will face pressure in the future. Steel mills will continue low inventory strategy, before December won't appear obvious phenomenon of inventory, the upstream production after continue to face high inventory pressure. Comprehensive consideration, ferroalloy prices or to support the cost of test again, ferrosilicon is in 7000 yuan/ton, silicon manganese in 6700 yuan/ton.
Coping strategies
Ferroalloy producers are relatively small, the production situation is shaken ferroalloy supply fast rebound this week. Ferrosilicon production 109100 tons, year-on-year increase of 4400 tons, silicon manganese production 182900 tons, year-on-year increase of 10000 tons. Ferroalloy enterprises has been one and half months rapid rehabilitation. Current profit levels have improved markedly, the end of August ferrosilicon alloy, in particular, profit obviously repair, we believe that the production situation will be continued. And silicon steel for prices this week 8850 yuan/ton, silicon manganese 7550 yuan/ton, the bidding results significantly exceed market expectations. The bidding price have rising freight premium factor, considering the previous control progress, the probability of future freight fell. We know that the early ferrosilicon production more in ningxia area in the near future and production schedule is bigger, the early stage of the production of the recent -arc furnace production in succession, the ningxia area ferrosilicon production is expected to return to the level of 28000 tonnes a week.
Industrial chain reaction, steel demand is insufficient risk on the high side, the industrial chain may be entered into the phase of negative feedback, ferroalloy future risk of falling demand. However, the early stage of the production gradually rehabilitation -arc furnace, ferroalloy supply quick rebound, the price of all previous supply support waning, excess supply will face the risk in the future. Steel mills will continue low inventory strategy, before December won't appear obvious phenomenon of inventory, the upstream production after continue to face high inventory pressure. Comprehensive consideration, ferroalloy prices to support the cost of test again, ferrosilicon is in 7000 yuan/ton, silicon manganese in 6700 yuan/ton. Suggest production enterprise selling hedge continue hold, can meet the entrance has a high entry, speculators can meet high shorting. In addition, focus on policy next week if there is a major positive. If yes, does not exclude the price will rise to break the previous high, but it is difficult to bring substantial improvement of supply and demand fundamentals of 01 contracts, the price still faces downside risk.
