In 2022, due to the common influence of domestic and foreign factors such as frequent epidemics and increasing global inflationary pressure, the ferrosilicon market will be in a state of rising and falling, the price fluctuation range will narrow, the annual average price will decrease, and the profit margin will be compressed. On the supply side, there is no policy impact on dual control of energy consumption, and profits drive the annual supply to increase. In 2023 years, the global economic growth is facing slowdown pressure. China’s economic policy is to expand domestic demand and stabilize growth. The furnace replaced by ferrosilicon production capacity is put into operation. The supply is expected to continue to increase in the first half of the year. The demand-side steel industry still insists on green and low-carbon development. It will be constrained. It is expected that the relationship between supply and demand in the first half of 2023 will be poor, and the average price will decrease compared with the first half of 2022.
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Operation Situation and Industry Review of Ferrosilicon Market in 2022
Market side: the price fluctuation range narrowed, and the average price moved down
In 2022, due to the continuous recurrence of domestic epidemics, weak downstream demand, foreign international conflicts, global economic inflationary pressures and other factors, the ferrosilicon market will rise and fall throughout the year.
According to the trend of the ferrosilicon market in 2022, the annual market is divided into four stages:
The first stage: (from the beginning of the year to mid-April) continued to rise. First, the steady growth of the domestic macro-economy is continuously released, and the black is expected to improve. Second, the conflict between Russia and Ukraine has led to an increase in bulk commodities and an increase in export transactions. Third, the price of raw material blue carbon has risen and the cost of ferrosilicon has increased. The combined effect of domestic and foreign factors has driven ferrosilicon prices fluctuated upward.
The second stage: (mid-April to the end of July) fluctuates downward. The first is the lack of confidence in the market due to multiple outbreaks of the domestic epidemic. The second is that the strong expectations of the black series fall behind the weak reality, and the demand performance is insufficient. The third is that the global inflation pressure is obvious. The Fed continues to raise interest rates, and bulk commodities are under pressure. , the cost has moved down, and the ferrosilicon market is in a volatile and downward situation.
The third stage: (August – mid-October) stop falling and rebound. First, the policy of stabilizing growth continues to strengthen downstream demand and improve. Second, the profit of silicon factories has narrowed and the start-up has declined, and the pressure on the supply side has eased. Third, the price of semi-coke raw materials has risen, and the cost support of factories has increased due to rising electricity prices. The ferrosilicon market has stopped falling and rebounded.
The fourth stage: (mid-October-end December) fluctuates within a narrow range. First, the start of profit recovery continues to pick up, second, the macroeconomic stabilization policy is favorable to stimulate, and third, the Fed’s interest rate hike has slowed down, and the long-short factors of ferrosilicon are in a tug-of-war, and the market price is in a state of narrow fluctuations.
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Cost side: Raw material price volatility narrows, annual cost of ferrosilicon increases
Semi coke: In 2022, under the pressure of rising upstream raw coal prices and narrowing downstream ferrosilicon profits, coking plants will struggle to operate. Although some small Fugu furnaces will be rectified and withdrawn from the market, the actual impact will be minimal, and semi coke prices will continue to fluctuate. From the trend point of view, the price fluctuated throughout the year, but the fluctuation range narrowed, and the decline was most obvious in July. In 2022, the average price of semi-coke small materials is 1695 yuan/ton, an increase of 210 yuan/ton compared with the 21-year average price of 1485 yuan/ton, a year-on-year increase of 14.14%.
Iron oxide scale: In 2022, the iron oxide scale will stabilize first, then drop, and bottom out. In 2022, the average price of iron oxide scale in Shijiazhuang, Hebei Province will be 1,042 yuan/ton, which is 127 yuan/ton lower than the average price of 1,169 yuan/ton in 21 years, a year-on-year decrease of 10.86% .
With the fluctuation of raw material prices narrowing, the average price of semi-coke rising, and the average price of iron oxide sheet falling, the annual production cost of ferrosilicon has increased compared with 2021.
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Profit side: Gross profit first increased and then decreased at the end of the year to repair the annual profit decreased compared with 2021.
In 2022, ferrosilicon will remain profitable throughout the year. Profits continue to rise in the first four months, profits decline from April to July, small profits or cost lines struggle from July to September, and profits recover from October to December. In 2021, under the influence of energy control, the profit per ton of ferrosilicon reached as high as 6,000-7,000 yuan. In 2022, the overall economic performance was not good, the profitability of the downstream steel industry dropped significantly, and the profit margin of ferrosilicon also narrowed significantly.
Outlook for the ferrosilicon market trend in 2023
The cost of electricity accounts for about 50% of the cost of ferrosilicon, followed by semi-coke, silica, iron oxide scale, labor, etc. In terms of electricity, it is expected that the electricity price will be less likely to decrease. The country’s control over silica mining is stricter, and the price of silica is expected to fluctuate less. The price of semi-coke is closely related to raw coal, and the cost is expected to remain resilient in 2023.
Facing the impact of the epidemic in 2022, the economy is running poorly, and energy consumption has not been mentioned. 2023 is the first year to fully implement the spirit of the 20th National Congress of the Communist Party of China. The Central Economic Work Conference has clarified 5 key tasks for 2023. Among them, focusing on expanding domestic demand is the first of the five major tasks. Stimulating domestic demand is considered to be the core task of stabilizing growth in 2023. It is expected that energy consumption will not be mentioned in the first half of the year, and the supply will remain high. At the end of the year, there may be environmental protection, energy Consumption and other measures introduced. At the same time, capacity replacement and new large furnaces will be put into operation in succession in 2023. It is estimated that the output in 2023 will be around 6 million tons.