Since mid-October, due to the obvious relaxation of the industry’s power restrictions and the continued recovery of the supply side, the price of ferroalloy futures has continued to fall, with the lowest price of ferrosilicon falling to 9,930 yuan/ton, and the lowest price of silicomanganese at 8,800 yuan/ton. In the context of supply recovery and relatively stable demand, we believe that ferroalloys will still maintain a downward trend, but the downward slope and space will be subject to changes in the price of carbon-based raw materials at the cost end.
Supply continues to rise
In the past few days, many ferrosilicon plants in Zhongwei area of ​​Ningxia have issued applications for power outages of submerged arc furnaces, and an alloy company’s own power plant in Guizhou is subject to no coal to buy, indicating that there is a possibility of suspending production. Disturbances of power shortages on the supply side have occurred from time to time, but the protection of thermal coal supply has produced substantial effects, and ferroalloy production continues to rise. At present, the output of ferrosilicon in the sample enterprises is 87,000 tons, an increase of 4 million tons from last week; the operating rate is 37.26%, an increase of 1.83 percentage points from last week. Supply rebounded for two consecutive weeks. At the same time, the output of silico-manganese in the sample enterprises was 153,700 tons, an increase of 1,600 tons from last week; the operating rate was 52.56%, an increase of 1.33 percentage points from last week. The supply of silicomanganese has rebounded for five consecutive weeks.
At the same time, steel production increased. The latest data shows that the national output of five major steel products was 9.219 million tons, a slight rebound from last week, and the average daily crude steel output also rebounded slightly. In the first three quarters of this year, domestic crude steel output increased by about 16 million tons compared with the same period last year, which is still far from the output reduction target set by the Ministry of Industry and Information Technology for the steel industry. Crude steel production is unlikely to increase significantly in November, and overall demand for ferroalloys is expected to be weak.
After the price of ferroalloy futures fell sharply, the volume of warehouse receipts dropped sharply. Significant discounts on the disk, increased enthusiasm for the conversion of warehouse receipts to spot, in addition, the obvious cost-effective advantage of point prices, all contributed to a substantial decline in the volume of warehouse receipts. From the perspective of corporate inventory, the silicomanganese inventory has declined slightly, indicating that the supply is slightly tight.
Judging from the situation of Hegang’s steel bids in October, the price of ferrosilicon is 16,000 yuan/ton, and the price of silicomanganese is 12,800 yuan/ton. The price of steel bids is significantly higher than last week’s futures prices. May adversely affect the price of ferroalloys.
Cost support is still
After the price of ferroalloy futures fell sharply, it found support near the spot cost. From the perspective of the latest production costs, ferrosilicon is at 9,800 yuan/ton, a decrease of 200 yuan/ton from the previous period, mainly due to the decline in the price of blue carbon. At present, the price of blue charcoal is 3,000 yuan/ton, and the price of coke futures has dropped sharply to around 3,000 yuan/ton. The fall in the price of blue charcoal in the later period is a huge risk of lowering the cost of ferrosilicon. If the skyrocketing rate of blue charcoal falls, the price of blue charcoal will move down to around 2,000 yuan/ton, and the corresponding cost of ferrosilicon will be around 8,600 yuan/ton. Judging from the recent performance of the blue carbon market, there has been a sharp decline in some areas. Similarly, the cost of silicomanganese is 8500 yuan/ton. If the price of secondary metallurgical coke drops by 1,000 yuan/ton, the cost of silicomanganese will be moved down to 7800 yuan/ton. In the short term, the static cost support of 9,800 yuan/ton for ferrosilicon and 8,500 yuan/ton for silicomanganese is still effective, but in the medium term, the prices of raw material end blue carbon and secondary metallurgical coke still have downside risks, which may lead to the cost of ferroalloys. Gradually go lower.
Focus on basis repair
The basis of the ferrosilicon 2201 contract is 1,700 yuan/ton, and the basis of the silicomanganese 2201 contract is 1,500 yuan/ton. The disk discount is still serious. The substantial discount on the futures disk is one of the factors that support the rebound in the disk. However, the current spot market sentiment is unstable and the rebound momentum of futures is insufficient. In addition, in view of the downward movement of spot production costs, there is a high probability that the basis will be repaired in the form of spot declines catching up with futures.
On the whole, we believe that the downward trend of the 2201 contract has not changed. It is recommended to go short on rallies, focusing on the pressure near ferrosilicon 11500-12000 yuan/ton, silicomanganese 9800-10300 yuan/ton, and ferrosilicon 8000-8600 yuan/ton. Tons and silicomanganese 7500-7800 yuan / ton nearby support.