OM Holdings (OMH) is the only Ferro Silicon producer listed on...

OM Holdings (OMH) is the only Ferro Silicon producer listed on the ASX.
Not only is OMH a Ferro Silicon producer it is also one of the larger ones in the world with power costs at the lower end, therefore its one of the most profitable FeSi producers in the world. The next Financial Report in August 2018 will confirm this.


ASIAN FERRO-ALLOYS CONF: Limited Chinese ferro-silicon exports influencing global market
China led upward momentum in the global ferro-silicon price in December last year, disproving opinions that China had lost its foothold on the global ferro-silicon market because its export volumes only account for about 20% of total output.
December 2017 saw much activity in the global ferro-silicon market.

Chinese domestic spot prices for ferro-silicon, basis 75% Si, hit nine-year highs at 10,000-12,000 yuan ($1,741-1,900) per tonne on December 8, 2017, while the Chinese ferro-silicon export price climbed to $2,100-2,400 per tonne on the same day, its highest level since June 2008.

Tracking Chinese prices, US spot ferro-silicon price hit multi-years high at $1.08-1.13 per lb on December 15, and the European ferro-silicon price, lumpy basis 75% Si, also recorded its highest level since September 2008 at €1,600-1,650 ($1,980-2,042) per tonne on December 15.

Many market participants acknowledged that the ‘China factor’ played a major part in this global ferro-silicon price rally.

“China has a very close linkage to last year's huge price spike,” a ferro-silicon producer in China said.

Late last year, European and US warehouse inventories were running at low levels while demand was robust, resulting in a short supply of ferro-silicon in western markets, according to market participants.

On top of this, China suffered from a production disruption in its north-western region due to the environmental crackdown by the local government.

Refineries in Ningxia province, one of the major production hubs for ferro-silicon in China, were ordered to curtail operations in December in order to minimize local air pollution in winter. The affected production capacity accounted for about a quarter of the total volume in China, according to dealers.

This added further tightness to ferro-silicon availability on a global scale, which in return underpinned alloy prices from east to west.

“It is simply a logic of supply and demand fundamentals – since Chinese production decreased, global supply was therefore affected,” an Asian trader said.

Furthermore, rising Chinese export prices raised the benchmark in neighboring countries such as Japan and South Korea, who seek a majority of their feed from China, and attracted other suppliers to divert cargoes from traditional markets to Eastern Asia.

On December 8, the Chinese ferro-silicon export price, on a fob basis, was $2,100-2,400 per tonne, $24 and $598 higher than the spot price in the US and Europe, which were assessed at $0.97-1.05 per lb on December 7 and €1,380-1,420 on December 8 (Euro/US: 1/1.18) respectively, according to Metal Bulletin’s calculations.

“Russian producers sell most of their alloys in the US and Europe. But as Chinese export prices were so high late last year, they diverted some inventory to China, which resulted in the supply constraints in the US and Europe,” the ferro-silicon producer from China said.

Other ferro-silicon suppliers, such as Malaysia, also targeted more profitable prices in Eastern Asia, leaving European buyers with limited readily available cargoes.

The butterfly effect led by China debunked the lingering idea that China no longer played a key role in the global ferro-silicon market after anti-dumping taxes up to 35.5% were imposed by the European Union on Chinese exporters in August 2007.

The percentage of anti-dumping taxes have been revised several times since then. At their current stage, Chinese ferro-silicon exports are subject to anti-dumping duties of 15.6-31.2% into the EU. Those measures are in force until April 11, 2019.

China exported 373,318 tonnes of ferro-silicon in 2017, according to China Customs data. Yet before Chinese ferro-silicon was shut out of the European market, Chinese ferro-silicon exports peaked in 2007 at 1.54 million tonnes, based on data from the China Iron & Steel Association.

“Even though Chinese ferro-silicon exports only take up around 20% of its total domestic output, China’s influence on the global ferro-silicon market remains strong as it has been one of the largest producers in the world,” the ferro-silicon producer from China said.

“China still has dominance over the ferro-silicon market; however, the price spikes seen by the whole world late last year were also due to an overreaction from the global market,” a producer said.