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In the first four months of 2023, China produced 1.168 million tonnes of ferro-alloy products, with the volume of the top-10 producing regions accounting for a high concentration of that output, producing 85.55% of the total, according to Wanli Shi, secretary general of the China Ferroalloy Industry Association.
The top-10 ferro-alloys production hubs in China are: Inner Mongolia, Ningxia, Guangxi, Guizhou, Shanxi, Shandong, Shaanxi, Qinghai, Hunan and Gansu provinces and six of the top-10 are in the north of the country, with just two accounting for just under half of the top-10 output.
“[The] concentration ratio in China’s ferro-alloys industry is quite high, much higher than steel and other sectors,” Shi said. “And I think the ratio will continue to rise with the cost spread [between] northern China and southern China [set] to expand.”
Inner Mongolia is by far the biggest in terms of market share in the first four months of 2023, with 36.34%, while Ningxia was second on 12.24%.
The northern regions – Inner Mongolia, Ningxia, Shanxi, Shaanxi, Qinghai and Gansu – enjoy cost advantages because they use low-cost coal-fueled electricity, have easier access to coke and have more efficient transport logistics, which are essential for the production of ferro-alloys products, including silico-manganese, ferro-silicon and ferro-chrome.
“Take the production cost of silicon-manganese. In Inner Mongolia, the cost is 6,283 yuan ($881.50) per tonne, while the cost in Guangxi (in southern China) is 7,138 yuan per tonne,” Shi said. “In other words, Inner Mongolian producers can earn a margin of 200-300 yuan per tonne with an ex-works price of 6,500-6,600 yuan per tonne, while Guangxi suffers with losses of 500-600 yuan per tonne.” fastmarkets
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- [Editor:kangmingfei]
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