Market and product
US ferrosilicon slides on liquidation pressure: trade
US ferrosilicon prices fell sharply this week on trader liquidationpressure and an aggressive sale to a consumer that had been in the market tocover third quarter requirements, market sources said Wednesday.
The Platts assessment for spot ferrosilicon (75%) fell to 90-93cents/lb, basis in-warehouse in major US hubs, Wednesday, from 92.50-94.00cents/lb a week earlier.
A mini-mill was widely reported to have bought 300 st for third-quarterdelivery at 92.00 cents/lb delivered North Carolina, equating back to around89.00 cents/lb on an in-warehouse Pittsburgh basis, or 89.50-90.00 centsin-warehouse Baltimore, although the business could not be verified.
"There's a small freight advantage if it's material coming fromBaltimore," said a trader.
The ferrosilicon is understood to be Norwegian origin and a large volumeof Norwegian ferrosilicon has recently been imported into the US, whichtraders attributed to poor market conditions in the European Union.
But several sources said there were signs of traders keen to liquidateold positions ahead of the traditionally slower third quarter, where steelmills typically take summer maintenance outages.
"The strength of the dollar is forcing some to try and liquidate," saida second trader, adding that several participants were "approaching the thirdquarter with caution."
However, a third trader said anyone selling at the equivalent of 89.50cents/lb on an in-warehouse Pittsburgh basis would be unable to replace it atthat level. "You cannot buy from an overseas producer and get it into awarehouse in Pittsburgh for anything like that," the trader said. "It's gotto be somebody liquidating an old position."
He put replacement costs at around 92.00-92.50 cents/lb on anin-warehouse Pittsburgh basis.
A mill buyer said he had bought one truckload of ferrosilicon fordelivery in the second week of July and paid 94 cents/lb delivered, equatingto 92 cents/lb on an in-warehouse basis. "You can't compare a singletruckload business with a 300 tons business, but I would expect to pay lessfor a requirement like that, especially as no other consumer seems to belooking for that type of quantity right now," the buyer said.
Several sources said the number of inquiries from consumers forthird-quarter requirements for ferroalloys in general was very thin. Thethird trader said: "If you look at the level of inquiries, everything pointsto a weaker third quarter, which what you would expect for the time of year,"the trader said.
"It's got to the point where the mill buyers are probably thinking theyhave time to wait, possibly even to the last week of June and they might dobetter, because it could weaken further."
There were mixed views as to whether the 92 cents delivered pricerepresented a repeatable level. "It's hard to say it's a one-off, rather thanbeing where the market now is," said the second trader. "If we had anotherinquiry and a piece of business to compare, then we'd have a better idea."
Another supplier agreed, saying: "I'd like to see a bit more evidencethe market is down there, before I start conceding it's below 90 cents," saidthe first trader.
The second trader said that the margins in ferroalloys trading hadevaporated considerably in the last two years. "It's a very challengingenvironment for traders; even producers are finding it tough going," he said.
The Platts assessment for spot ferrosilicon (75%) fell to 90-93cents/lb, basis in-warehouse in major US hubs, Wednesday, from 92.50-94.00cents/lb a week earlier.
A mini-mill was widely reported to have bought 300 st for third-quarterdelivery at 92.00 cents/lb delivered North Carolina, equating back to around89.00 cents/lb on an in-warehouse Pittsburgh basis, or 89.50-90.00 centsin-warehouse Baltimore, although the business could not be verified.
"There's a small freight advantage if it's material coming fromBaltimore," said a trader.
The ferrosilicon is understood to be Norwegian origin and a large volumeof Norwegian ferrosilicon has recently been imported into the US, whichtraders attributed to poor market conditions in the European Union.
But several sources said there were signs of traders keen to liquidateold positions ahead of the traditionally slower third quarter, where steelmills typically take summer maintenance outages.
"The strength of the dollar is forcing some to try and liquidate," saida second trader, adding that several participants were "approaching the thirdquarter with caution."
However, a third trader said anyone selling at the equivalent of 89.50cents/lb on an in-warehouse Pittsburgh basis would be unable to replace it atthat level. "You cannot buy from an overseas producer and get it into awarehouse in Pittsburgh for anything like that," the trader said. "It's gotto be somebody liquidating an old position."
He put replacement costs at around 92.00-92.50 cents/lb on anin-warehouse Pittsburgh basis.
A mill buyer said he had bought one truckload of ferrosilicon fordelivery in the second week of July and paid 94 cents/lb delivered, equatingto 92 cents/lb on an in-warehouse basis. "You can't compare a singletruckload business with a 300 tons business, but I would expect to pay lessfor a requirement like that, especially as no other consumer seems to belooking for that type of quantity right now," the buyer said.
Several sources said the number of inquiries from consumers forthird-quarter requirements for ferroalloys in general was very thin. Thethird trader said: "If you look at the level of inquiries, everything pointsto a weaker third quarter, which what you would expect for the time of year,"the trader said.
"It's got to the point where the mill buyers are probably thinking theyhave time to wait, possibly even to the last week of June and they might dobetter, because it could weaken further."
There were mixed views as to whether the 92 cents delivered pricerepresented a repeatable level. "It's hard to say it's a one-off, rather thanbeing where the market now is," said the second trader. "If we had anotherinquiry and a piece of business to compare, then we'd have a better idea."
Another supplier agreed, saying: "I'd like to see a bit more evidencethe market is down there, before I start conceding it's below 90 cents," saidthe first trader.
The second trader said that the margins in ferroalloys trading hadevaporated considerably in the last two years. "It's a very challengingenvironment for traders; even producers are finding it tough going," he said.
