Nowadays, the annual production capacity of ferrosilicon in the world is about 11.1 million tons, and China’s production capacity is about 8 million tons, making it the world’s largest producer. In 2022, China’s annual output of ferrosilicon will be 5.3209 million tons, a slight year-on-year decrease.
China’s ferrosilicon production can be traced back to before the founding of the People’s Republic of China, but the annual output is only a few hundred tons. After 1950, the production of ferrosilicon has been greatly developed. Especially during the period of planned economy, the state established a number of ferroalloy enterprises in various places and introduced large-scale ferrosilicon production equipment.
The expansion of China’s ferrosilicon production scale has gone through three stages: the first stage was the mid-1980s. The second stage is the middle and late 1990s. The third stage is from 2000 to the present. With the continuous optimization of process technology and equipment, the production process of ferrosilicon has become more and more standardized.
The production distribution of ferrosilicon is closely related to the richness of local resources. Therefore, the distribution of my country’s ferrosilicon industry is mostly concentrated in the central and western regions with relatively rich resources. Ferrosilicon production is highly concentrated.
At present, there are five ferrosilicon production areas in Inner Mongolia, Qinghai, Shaanxi, Ningxia and Gansu.
On the demand side of ferrosilicon
According to statistics, my country’s ferrosilicon consumption in 2020 will be 4.21 million tons. The consumption in 2021 will be 5.06 million tons, a year-on-year increase of 20.19%. In 2021, the consumption will be about 260,900 tons less than the output, which is a state of tight balance between supply and demand.
Ferrosilicon is mainly used in the four major fields of iron and steel enterprises, foundry industry, magnesium metal and export. Among them, iron and steel enterprises consume the largest proportion of ferrosilicon. 70% of ferrosilicon production is absorbed by steel mill market demand. Magnesium metal, foundry industry, and export fields follow.
The iron and steel industry is the main downstream consumer industry of ferrosilicon in China. Ferrosilicon is mainly used in steelmaking in steel mills. The addition of ferrosilicon improves the strength, hardness and elasticity of the steel and ensures the quality of the steel.
Only 5 kg of ferrosilicon is needed to produce 1 ton of crude steel. Less than 1% of ferrosilicon is used to produce one ton of steel. Therefore, the profit level of iron and steel enterprises is basically not affected by changes in the price of ferrosilicon. As a result, the potential volatility of ferrosilicon prices is relatively large.