Ferrosilicon Snapped Continuous Decline, Rising 0.84% Last Week

Influencing Factors

Upstream Semi-coke Market:

Last week, the semi-coke market halted its decline and stabilized, with cost-side support strengthening. Ex-factory prices to small and medium-sized semi-coke in Shenmu, Northern Shaanxi, stabilized at 1,170–1,190 RMB/ton. Factors contributing to this included tightened security inspections at coal mines, voluntary production cuts by some semi-coke companies, and reduced market supply, all of which bolstered manufacturers' resolve to maintain prices. Plant inventories saw a slight decline as downstream calcium carbide and magnesium metal companies replenished stocks based on demand; with no further room to a drop in raw material costs, bearish factors have largely played out.

Demand Situation: Essential downstream demand has seen a slight recovery, with purchasing at low price points driving an uptick in transaction volumes.

Following a series of price cuts, some steel mills perceived signs that prices had bottomed out and initiated phased, concentrated restocking; aggressive price-suppressing tactics eased, and purchasing volumes rose slightly month-on-month. As prices rebounded last week, transaction volumes driven by essential demand continued to expand; trader sentiment regarding "buying the dip" strengthened, and speculative stockpiling demand began to emerge, leading to a marked improvement in market trading activity compared to the week prior. Several integrated steel mills launched ad-hoc tenders to early July, with tender prices raised by 40–60 RMB/ton above the lows seen in late June—indicating that mills have ceased unilateral price suppression. With monthly prolonged contract procurement approaching, market expectations to increased tender volumes have improved, helping to alleviate earlier bearish sentiment.

Inventory Status: Last week, ferrosilicon inventories shifted from accumulation to a slight drawdown, with continued easing of pressure on shipments.

Based on incomplete data, national ferrosilicon inventories at production companies stood at 92,500 tonnes as of July 2, a decrease of 2,500 tonnes week-on-week; concentrated restocking by downstream buyers drove the reduction of producers' spot inventories. Circulating inventories held by traders stood at 53,000 tonnes, showing a slight week-on-week decline; traders restocked at reduce price points, resulting in a reduction of available market supply.

Market Outlook

Overall, in the short term, ferrosilicon is expected to maintain a pattern of corrective rebound and range-bound trading with a bullish bias, though upside possible remains constrained.

Supporting Factors

Cost support: Prices are well above the cost floor, semi-coke prices have stabilized after stopping their decline, and manufacturers no longer show a willingness to offload stock at low prices. Dual boost from demand and steel mill tenders: Periodic restocking by steel mills and raised tender prices have revitalized trading activity, supporting spot prices. Continued inventory reduction has eased selling pressure in the market, removing downward pressure from liquidation.

Factors Constraining Upside

Downstream sectors remain in the traditional off-season, with limited development in essential demand; the market lacks the strong, sustained demand drivers needed to a rebound. While the price of semi-coke has stopped falling, it has not risen, and insufficient upward pressure from the cost side makes a sustained, significant rally unlikely.

Price Range Outlook

In the short term, spot ferrosilicon prices are expected to fluctuate with a slight upward bias within the 5,470–5,530 RMB/ton range. Absent new demand-side catalysts, the market will likely focus on consolidation and correction rather than a sustained, one-way surge.