While the ferro-alloys industry prepares to gather in Chicago for the annual North American Ferro-alloys conference on September 25-27, Fastmarkets outlines some of the key topics likely to dominate discussions this year.Where is the floor for ferro-vanadium prices?
Ferro-vanadium prices in Chinese and European markets both hit all-time highs last year, partly because of an anticipated increase in demand from the implementation of new rebar manufacturing standards in China from November 1 last year.
But prices began to drop sharply late last year when market participants realized enforcement of the revised rebar policy was not as stringent as had been expected and because steel mills had increased their use of ferro-niobium to reduce their consumption of more costly vanadium.
Chinese mills have shown more interest in buying ferro-niobium, according to market sources, because this alloy’s prices are comparatively more stable and much cheaper than those of vanadium products, and do not have a history of price volatility.
The benchmark ferro-vanadium price in Europe has fallen by almost 60% since the start of the year. Fastmarkets assessed the price at $28.40-29.20 per kg on Friday September 20, down from $70-72 per kg on January 2.
Similarly, in the US, the price is down by 66.3% from January 3 when it stood at $42-45 per lb to its latest assessment of $14.35-15 per lb on September 19.
Fastmarkets research forecasts the European price to remain well below early 2019 levels into November until annual contracts are agreed before a late fourth-quarter 2019/first-quarter 2020 upturn when steel mills start to restock for 2020.
“The overall level of ferro-vanadium demand in the second half of 2019 and into 2020 will be dampened by a number of factors,” Fastmarkets analyst Amy Bennett said. “Steel mill shutdowns in Europe and the United States, as well as less stringent than expected enforcement of the latest rebar standards within China will hinder vanadium consumption. Increased imports of ferro-niobium as steelmakers seek to diversify their raw material requirements and to protect themselves against the potential for future ferro-vanadium price volatility will also reduce total vanadium consumption,” she added.
Where is ferro-tungsten’s next move?
With the Chinese domestic tungsten concentrates price rising amid tightening supply, together with the removal of Fanya uncertainty following the successful auction of APT stocks, Fastmarkets research expects Chinese tungsten export prices moving higher in the near term.
But while the improvement in Chinese markets may influence European prices, which have been under pressure for most of this year, any pricing gains in Europe will likely be limited amid continuously weakening demand in the region, Fastmarkets research forecasts.
Fastmarkets’ latest assessment for the benchmark European ferro-tungsten price stood at $28-29.50 per kg as of September 20, down from $30.80-32.65 per kg at the beginning of the year.
Given the declining manufacturing sector in Europe, the upward potential for ferro-tungsten prices is likely to be limited, according to market sources.
Will FeTi demand improve, supply stay in check?
One thing ferro-titanium market players agree on is that the hoped-for rebound in September after the typical summer slowdown has not yet happened and that Russian material, whose sudden cessation of supply in March led to the year’s pricing high, is making its way back onto the market.
Prices for the main grade, with 70% contained titanium, have steadily declined since, and few suppliers are bullish on price. They typically see weaker end demand from the stainless steel industry, especially for the big end markets of automotives and consumer appliances, into which low-carbon flat steel containing ferro-titanium finds its way.
Suppliers hope to see better demand in the typically strong fourth quarter, especially in European steel, hardest hit by the trade wars.
Meanwhile, some question whether too much raw material for ferro-titanium is accumulating from its supply sector, the airline industry. Plane-building has declined following groundings of some aircraft models for safety reasons and the titanium scrap originally destined for this end sector might make its way into the ferro-titanium supply chain, some say.
That could put downward pressure on ferro-titanium prices since the titanium component comes exclusively from scrap. Others say not, since nuclear scrap is so much more expensive than the scrap turnings and solids traditionally used to make ferro-titanium.
The two don’t always move in lock-step. Titanium scrap prices rose faster than for ferro-titanium during the March/April rally and scrap reportedly was even being shipped from the United States to Europe out of fear of a ferro-titanium shortage.
At that time, Europe suddenly lost what some say was its biggest ferro-titanium supplier when it declared force majeure in March. The European price climbed to a six-month high in April.
It has drifted down since, despite a fire later that month at a major UK-based producer that has yet to resume operations. The supplier, FF Mottram, is said to have capacity equal to about 9% of global ferro-titanium market, estimated at 70,000 tonnes per year.
Fastmarkets assessed the European price for ferro-titanium 70% ddp at $4.60-4.90 per kg on September 25, narrowing downward by 10 cents and breaking a four-week steady streak. The price is down 13.6% from the annual high of $5.20-5.50 per kg on April 10.
Fastmarkets assessed the same grade in the US (without delivery of approximately 5 cents per lb) at $2.15-2.25 per lb on September 19, down from its annual high of $2.45-2.65 on March 21.
US prices, often higher than European prices, are not now so much. Some attribute this to Russian suppliers targeting the US with cheap powder.
Powder sales have dominated summer business in the US. Some view it as normal for powder to dominate the spot market, but others see imports undercutting the premium powder product, lately offered as cheaply as lump.
It may also further signal that mini-mills are faring better than traditional steel mills. Mini-mills typically cannot process lump and add ferro-titanium in the form of cored-wire made by third-parties to their steel.
Contract negotiations for lump will show the strength of ferro-titanium demand. Some say 2020 talks have begun, with parties in the US negotiating down from $2.35 per lb. Discounts run from a couple of percent to 10%.
And some are looking further out still, to the day when emissions controls mean vehicles use less steel containing ferro-titanium and more using lightweight aluminium.
The North American Ferro-alloys Conference kicks off in Chicago on September 25. For more details about the event, please click here.
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