[Ferro-Alloys.com] In early July, the increase in US imports of ferrosilicon from Brazil triggered the largest price drop in the United States since 2008, completely reversing the upward trend of prices a few months ago.
From the last week of April to the first week of July, U.S. ferrosilicon prices fell 23%, to the biggest drop since 2008.
In the first half of this year, mainly due to the impact of covid-19, the demand weakened, but it is worth noting that imports of US from Brazil have risen following the low levels at the end of 2019.
In May this year, the United States imported 4406 tons of ferrosilicon from Brazil, the highest level in four years.
Market participants had expected Brazil's normally low-cost ferrosilicon supply to tighten in early 2020, leading to a rise in spot market prices.
These expectations were largely met, with prices rising steadily in the first quarter to a high of 96 cents / pound by the end of April, partly due to tight supply at the end of 2019.
In November and December 2019, traders received fewer ferrosilicon offers from Brazilian producers due to capacity cuts and the need to fulfill annual contracts. Market participants noted a shortage of inventories, with US imports falling 27% to 3569 tons throughout the fourth quarter.
Nevertheless, the concerns of suppliers in the spot market have been confirmed to a large extent, as the total import of ferrosilicon in the United States rose after the end of the first quarter of this year, driven by Russian and Brazilian shipments, which once again filled the US market with ferrosilicon supply.
Market participants said the decline in US steel production was also a reason for the fall in ferrosilicon prices. So far in 2020, U.S. steel production has fallen by 20% to 43 million net tons, according to the American Iron and Steel Institute.
Now in the spot market, the supply of Brazilian alloy is increasing again. Combining the limited purchasing intention of steel mills with low-cost and sufficient supply of other alloy goods, the price is expected to be further under pressure.
Source: translated by editor
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