Ferro-alloys

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Report includes Data includes
• Market prices & exchange rates • Ferro-alloy prices for key regions
• Ferro-alloy price forecasts (US, China, Japan, Europe)
• Global crude steel highlights • European exchange rates
• Ferro silicon & manganese supply/demand • Global crude steel production
• Ferro chrome, nickel & molybdenum supply/ • Supply/demand balance for all
demand key ferro-alloys
• Global stainless steel production • Price forecasts for all key
• Ferro silicon highlights ferro-alloys
• Silicon metal highlights • Global stainless steel production
table
• Manganese highlights
• Stainless steel highlights
• Ferro-chrome highlights
• Nickel highlights
• Molybdenum highlights
• Vanadium highlights
• Tungsten highlights
• Freight rates (BSI, JEHMA, capesize)

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 Ferro-alloys Market
Tracker
26 JUNE 2019

A unique source of market intelligence, analysis and forecasts

covering the international ferro-alloys industry
European ferro-alloy price forecasts ($/tonne)
Monthly update 2,200 Forecast prices

2,000
1,800
1,600
1,400
1,200
Contents 1,000 FeSi 75%
SiMn 65-70%
2 Market prices & exchange rates 800 HC FeCr 60%

3 Ferro-alloy price forecasts 600

4 Global crude steel production Jun Oct Feb Jun Oct Feb Jun Oct Feb Jun
17 17 18 18 18 19 19 19 20 20
5 Ferro silicon highlights Source: Fastmarkets MB research

6 Silicon metal highlights

This month’s key ferro-alloy forecast highlights:
7 Manganese highlights
8 Ferro silicon & manganese supply/demand l The array of steel mill production cut announcements in recent weeks
may lend much-needed support to downward spiralling steel prices,
10 Global stainless steel production
but will not help the already struggling ferro-alloy markets. Steelmakers
11 Ferro-chrome highlights globally are slashing production, with ArcelorMittal acting initially to
12 Nickel highlights shutter facilities in Europe, and most recently announcing two blast
furnace maintenance outages in the US for Q3 2019. Also in the US, US
13 Molybdenum highlights
Steel has announced maintenance outages at several of its blast furnaces,
14 Vanadium highlights with the furnaces expected to remain off line for the remainder of 2019.
14 Tungsten highlights l With global steel output growth far outpacing steel consumption growth
15 Ferro-chrome, nickel & molybdenum thus far in 2019, the moves to cut production and attempt to stop steel
price declines, particularly in the US and Europe are unsurprising, but will
supply/demand
lead to declining ferro-alloy demand.
l The number of casualties from falling prices and declining profitability in
the chrome industry continues to rise. Following on from guidance from
both Glencore and Hernic in April that output of ferro-chrome at their
sites would be reduced this year, June saw Afarak announce that it would
idle two of its furnaces at its Mogale Alloys works in a bid to stem losses.
l The malaise affecting global ferro-chrome spot markets during Q2 2019
resulted in a reduction in Q3 2019 charge chrome contract prices, sliding
13% to $1.04/lb. Producer efforts to cut production to remedy the supply-
demand imbalance may help chrome prices to find a floor during the
coming quarter.
l Vanadium prices suffered further losses during June, in line with our
expectations. Ferro-vanadium prices are showing signs of reaching or
approaching a floor, however. Inspections of rebar facilities by the Chinese
authorities are expected, spurring additional ferro-vanadium purchasing
by Chinese consumers, while ferro-vanadium has also regained
competitiveness via ferro-niobium pricing. Moreover, plunging vanadium
prices have rendered high-cost production capacity uncompetitive, and
together with rising environmental concerns, have limited the return of
Chinese stone coal producers, and in turn is helping to tighten vanadium
supply.
l We forecast ferro-vanadium prices are at, or are rapidly approaching a
floor, with near-term stability followed by higher prices later in Q3 2019.

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 3

Fastmarkets MB Steel Scrap & Metallics market tracker | 30 April 2019 4
Fastmarkets MB ferro-alloys market tracker | 26 June 2019 5
 Ferro silicon highlights
Further declines in US and European prices expected in Q3 2019
US mill capacity utilisation rates vs. Chinese spot ferro-silicon prices have been steady through June amid fairly
domestic FeSi prices tight prompt supply and a small increase in an already firm futures market.
% utilization rate [LHS] Chinese ferro-silicon, basis 75% silicon, spot prices were last assessed at
100 FeSi [RHS] 1.15 5,900-6,100 yuan ($858-887) per tonne, unchanged for a fifth consecutive
1.10 week. The Chinese ferro-silicon export price was last assessed at $1,130-1,180
1.05 per tonne fob.
90
1.00
0.95 Bellwether purchaser and major consumer Hebei Steel has held its latest
monthly purchase price mostly unchanged from May. Other Chinese sources
%

80 0.90 $/lb
0.85 have noted an uptick in demand from other downstream mills that are
0.80 looking to source their required ferro-silicon tonnages in the next few weeks,
70
0.75 putting a squeeze on availability of prompt material. Cementing support
0.70 in domestic physical ferro-silicon prices was a small strengthening in the
60 0.65 Chinese futures market. The most-traded September ferro-silicon futures
Jun Dec Jun Dec Jun Dec Jun Dec Jun
15 15 16 16 17 17 18 18 19
price on the Zhengzhou Commodity Exchange (ZCE) closed at 6,098 yuan
Source: AISI, Fastmarkets MB research per tonne on June 21.

As a result, suppliers are holding their offer prices ahead of imminent steel
Malyasian ferro-silicon exports (tonnes) mills’ July tender negotiations. Market sentiment is positive in China in line
with the ferro-silicon futures market, while spot market alloy availability has
80000 been limited.
70000
In Europe, the ferro-silicon market has fallen in June due to weak spot
60000
demand and an increasing number of quarterly deals done below €1,000
50000 ($1,139) per tonne, which has dragged down agreed prices for prompt
40000 business. European ferro-silicon spot prices have fallen in line with and
30000
to similar levels for longer-term deals delivered in the third quarter and
participants expect further price weakness as the market heads into the
20000
seasonal summer slowdown. Fastmarkets’ price assessment for ferro-silicon,
10000 basis 75% silicon, into major European destinations, is at €950-980 per
0 tonne. Malaysians and Ukrainians are offering ferro-silicon at an equivalent
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 €950-960 per tonne into Europe, with nothing offered from Brazil.
14 14 15 15 16 16 17 17 18 18 19

Source: Fastmarkets research, Customs data The European steel sector is struggling, and we understand European
steelmakers have said they will close for longer than the usual two-to-three
weeks this summer, perhaps for a month or more, negatively affecting ferro-
silicon consumption during Q3 2019.

The US ferro-silicon market has been flat in line with trading activity, with
prices last assessed at 83-88 cents per lb. Traders have been reported
canvassing the market with unsolicited offers of cheaper imported material,
but there have been few takers due to little buying interest from consumers.
News of numerous blast furnace closures by US steel producers, including US
Steel and ArcelorMittal, will further dampen demand for ferro-silicon in the
coming months.

European FeSi price $/tonne Fastmarkets MB research outlook

2,000 Lower ferro-silicon offer prices from traders have won out in both the
1,800 European spot and longer-term delivery markets. With July and August
1,600
seen as being very quiet in terms of consumer demand, lower ferro-silicon
spot prices are expected in Europe in the near term. The US is facing
1,400
a similar scenario, with slow spot ferro-silicon demand and numerous
1,200
blast furnace closures underway. US steelmakers are expected to ignore
1,000
prompt business for ferro-alloy feed in the summer, and as a result, we
800 forecast US ferro-silicon prices to trend lower in the coming weeks. In the
Chinese ferro-silicon market, there have been early indications of possible
price improvement, but any upward momentum, however, is expected to
Source: Fastmarkets MB research
be modest.

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 6

 Silicon metal highlights
Further price declines likely amid rising supply and declining demand
Japan aluminium alloy production vs. silicon Chinese silicon metal export prices have been unchanged for the past five
metal consumption (tonnes) weeks, on low transaction volumes. We expect a slow recovery from supply
80000 Al Alloy Production (LHS) 4500 constraints on 553 grade silicon metal in Yunnan province from mid-June,
Si Consumption (RHS) with more refiners resuming operations in the province’s rainy season.
75000 Refiners are monitoring the market and are unlikely to return to normal
4000 operating levels rapidly, however, in expectation of price weakness in the
70000 near term. Silicon metal export prices from mainland China are at $1,440-
1,510 per tonne fob.
65000 3500

Some Chinese secondary aluminium alloy producers have suffered as a

60000
3000
result of the increase in the US import tariff on Chinese aluminium wheels to
55000
25% from 10% in June, diminishing demand for silicon metal. Typically, silicon
metal refiners in Yunnan resume production in the last two weeks of May,
50000 2500 or the first week of June, when energy costs are cheaper due to increased
Apr Jul Oct Jan Apr Jul Oct Jan Apr
17 17 17 18 18 18 18 19 19
hydroelectric power in the rainy season.
Source: Fastmarkets MB research, TEX Report
Prices for 441 and 553 grade silicon metal in Europe have been declining in
June, with the likelihood of further declines to come. Silicon metal grade 441,
US auto assemblies vs US silicon metal
minimum 99% silicon, in-warehouse Rotterdam was last assessed at €1,690-
price
1,790 per tonne, down from €1,820-1,920/tonne last month. Silicon metal
US light vehicle assemblies (m units SAAR) (LHS)
grade 553, minimum 98.5% silicon, in-warehouse Rotterdam is at €1,630-
US silicon metal price ($/lb) (RHS)
1,720 per tonne, down from €1,700-1,800/tonne previously.
12.5 1.50

12.0 1.40 The silicon metal price outlook is bearish for H2 2019 given readily available
11.5
1.30 supply and tepid demand affected by falling international auto sales.
11.0
1.20
Aluminium alloys used in car body manufacturing is a major consumer of
10.5 silicon metal. Alloy makers are said to be covered for their silicon needs in
1.10
10.0 existing long-term contracts and little or no additional demand is expected
9.5
1.00 in the spot market for much of the rest of this year.
9.0 0.90
The US silicon metal price has been weakening in June, but the pace of
8.5 0.80
declines is slowing, indicating that the market may be nearing a floor.
US 553 grade silicon metal has been virtually flat in thin trading in June,
Source: Fastmarkets research
narrowing to $1.08-1.11 per lb, from $1.08-1.12 per lb in May.

Downward pressure persists for now, however, amid cheaper overseas

availability into the US where there is falling demand from automotive
sector end users after earlier bulk buying by intermediaries that use silicon
metal in alloys for cars. We understand there is a fundamental, as well as a
psychological, price floor around $1 per lb, a level seen close to break-even
production costs.

Some buyers have indicated they have sufficient silicon metal to meet their
smelting needs through Q1 2020. US secondary aluminium alloy prices have
been falling across the range of grades, undermined by slow demand, and
as aluminium scrap, as well as silicon metal prices, have been falling steadily
for months. Buyers tend to resist purchasing what they need until they are
confident those weakening feed prices have reached a floor.

European Si metal price $/tonne Fastmarkets MB research outlook

2,700 Amid declining demand and the prospect of imminently increasing
2,600 supply, Chinese traders are remaining on the sidelines on expectations
2,500 that export prices will weaken in the near term. Diminished demand from
2,400 the automotive industry globally, reflecting both trade wars and slowing
2,300 economic growth, is dampening silicon metal consumption across the
2,200 major market. We expect prices to trend stable to lower into Q3 2019.
2,100
2,000

Source: Fastmarkets MB research

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 7

 Manganese highlights
Manganese alloys are mixed despite continued falloff of ore prices

Chinese HR steel prices vs. FeSi and SiMn Manganese ore prices fell by as much as 8% over the past month with
export prices further declines expected, given uncertainty in the steel and manganese
HR Coil (LHS) alloy markets. Fastmarkets’ 44% manganese ore index cif Tianjin
800 FeSi (RHS) 2,600 has dropped to $5.75/dmtu, down from $6.33/dmtu a month ago as
SiMn (RHS) 2,400 Fastmarkets’ 37% manganese ore index fob Port Elizabeth fell to $4.59/
700
2,200 dmtu from $5.16/dmtu last month. Prices are declining even though
600
2,000
global manganese ore production has been declining in recent months
$/tonne

and manganese ore availability at Chinese ports is tighter than inventory

$/tonne
500 1,800
numbers indicate. While manganese ore stocks in main Chinese ports
1,600
400 stand at 4.09-4.12 million tonnes vs. 2.9-3.02 million tonnes at the start
1,400 of the year, some of those stocks are described as being “frozen” with
300
1,200 market participants reluctant to sell into a falling market.
200 1,000
Jun Dec Jun Dec Jun Dec Jun There, however, has been a disconnect between ore and alloys, with
16 16 17 17 18 18 19 Chinese silico-manganese prices moving upwards to RMB7,350-7,400/
Source: Fastmarkets MB research tonne from RMB7,000-7,100/ton a month ago, as spot business improved
driven by a combination of tight supply with the slow resumption of
operations at smelters that had been shutdown for maintenance, and
European high-carbon ferro-manganese
increased momentum in the Zhengzhou Commodity Exchange market
prices vs. EU steel flat products production
with the most-actively traded September silico-manganese contract
7,000 Flats Production (LHS) 1,300 rising to RMB7,428/tonne from RMB7,200-7,250/tonne. Also, some buyers
HC FeMn Price (RHS) believe prices will rise further should South32 and other smelters decide to
cut their alloy production. Chinese high-carbon ferro-manganese prices
1,200
held steady at RMB6,600-6,700/tonne.
6,000
('000 tonnes)

(€/tonne)

1,100 European manganese alloy prices are declining against falling ore prices
as well as temporary steel production cuts dampening demand. On low
5,000 trading volumes, European silico-manganese prices slipped to €950-990/
1,000 tonne from €970-1,020/tonne, while high-carbon ferro-manganese prices
fell to €1,020-1,070/tonne from €1,050-1,100/tonne.
4,000 900
Jun Oct Feb Jun Oct Feb Jun The US manganese alloy market has been fairly steady, but is starting
17 17 18 18 18 19 19 to show signs of stress. US steel production has remained buoyant, with
Source: Fastmarkets MB research average utilization rates remaining above 80%, though the falling steel
price environment has now prompted steel production cuts. US Steel is
temporarily idling two of its US blast furnaces, while ArcelorMittal also
has blast furnace maintenance outages scheduled for later in Q3 2019.

Spot manganese alloy business in this traditional contract market has

been virtually non-existent at a very wide range. While most high-carbon
ferro-manganese prices are generally higher, at about $1,350-1,400/
long ton from $1,320-1,400/ton, we have heard some business being
conducted at as low as $1,280/ton and as high as $1,425/ton. Meanwhile
US silico-manganese prices are down, with most business at $0.60-$0.61/
lb. vs. $0.62-$0.65/lb. last month. At least one deal, however, was said to
be conducted as low as $0.57/lb.

European SiMn price $/tonne Fastmarkets MB research outlook

1,300 The near-term outlook for both manganese ore and alloy prices is fairly
1,250
negative given slowing economic growth and increasing steel mill
outages as we enter the seasonally slower summer season characterized
1,200
by industrial closures. Not only have some steel mills announced plans
1,150
to temporarily idle some of their furnaces, but some smelters – including
1,100
South32 – are considering cutting back their manganese alloy production.
1,050 If both steelmakers and alloy producers reduce output, we could see the
1,000 downward trend in prices be modest and temporary, but in the absence
of a supply-side response from manganese producers, price declines
could be more severe and longer lasting.
Source: Fastmarkets MB research

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 8

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 9
Fastmarkets MB ferro-alloys market tracker | 26 June 2019 10
 Ferro-chrome highlights
Afarak follows Glencore and Hernic with production cuts
Afarak EBIT margin The number of casualties from falling prices and declining profitability in the
chrome industry continues to rise. Following on from guidance from both
25%
Glencore and Hernic back in April that output of ferro-chrome at their sites
20% would be reduced this year, June 12 saw Afarak announce that it would idle
15% two of its furnaces at its Mogale Alloys works in a bid to stem losses.
10%
The Afarak cutbacks amount to around 40,000-50,000 tonnes of output
5%
by our calculations – a similar cutback to that announced by Glencore.
0% Inevitably if Glencore, South Africa’s major low-cost producer, is suffering,
-5% others will be as well. Indeed, Afarak had already been lossmaking
throughout 2018 (see chart).
-10%

-15% The main culprits are familiar ones – rising production costs in South Africa
-20% coupled with falling ferro-chrome prices in most global markets. Of key
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 importance for South Africa’s ferro-chrome smelters, the Chinese import
15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19
Source: Afarak, Fastmarkets MB Research
price of charge chrome has continued to drop as buyers there have seen
their negotiating position improved by large quantities of supply and reduced
needs. The import price has duly weakened by a further $0.05/lb month-on-
Premium/discount of Chinese spot FeCr month to now sit at $0.74/lb cif Shanghai, down by 15% since the beginning
prices to import material ($/lb Cr contained) of Q2 and at its lowest level in three years.
0.15
Behind this decline lies the weakening of China’s stainless steel market.
0.1 Stocks continue to rise and the country’s large mills have cut back sharply
on raw material purchasing in recent months. The tender prices offered for
0.05 ferro-chrome for June delivery from China’s leading stainless steel mills fell
by some 5% from those offered in May. Similar falls are expected for tender
0
offers in July.
-0.05
Domestic ferro-chrome prices within China also reveal a weakening market,
-0.1 but perhaps one that is near the bottom of the cycle given that sellers have
been unable to cut prices in line with import offers. Spot market ferro-
-0.15
chrome is being offered within China at RMB6,600/tonne gross weight,
Nov 17

Nov 18
Nov 15

Nov 16

May 18

May 19
Aug 18
May 15

May 16

May 17

Feb 19
Aug 15

Feb 16

Aug 16

Feb 17

Aug 17

Feb 18

down since last month but only by RMB200/tonne. Equivalent to around

$0.79/lb chrome contained, the gap between import and domestic prices
Source: Fastmarkets MB Research
has widened (see chart).

As with the recent cutbacks in ferro-chrome production seen in South Africa,

this situation is generally indicative of sellers struggling to offer material at
current price levels. Indeed, we estimate that Chinese ferro-chrome prices
are now around 5% below levels that would be indicated by average costs
of production in the country. Such a situation is not sustainable for any
significant amount of time. Either prices will have to rise or costs will have to
come down. While ore prices have continued to decline slightly as of late, the
cost side of the equation is unlikely to bring the market into balance by itself.
In the end, those aforementioned excess supplies will have to be worked
down in order for producers to strengthen their bargaining position and
obtain higher prices.

European FeCr price $/lb Fastmarkets MB research outlook

1.50 Despite an improvement in global chrome markets during Q1 of this year,
Q2 has seen the market suffer a supply-induced hangover. China’s stainless
1.30 steelmakers continue to work down the stocks built up during Q1 amid
a slowdown in demand for their products. Demand growth elsewhere
1.10
remains lacklustre as well. The malaise affecting spot markets during Q2
0.90 has meant that contract prices for Q3 have been settled downwards. They
have fallen by 13% to $1.04/lb. Producer efforts to cut production to remedy
0.70 the supply-demand imbalance may help chrome prices to find a floor
during the coming quarter.
Source: Fastmarkets MB research

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 11

 Nickel highlights
Plenty of supportive nickel-specific price drivers
Nickel price forecasts to Q4 2020 ($/t) Nickel prices started to look more resilient in mid-June and had begun to
challenge resistance at $12,000 per tonne, aided by fears over the impact
22000
High-low range of flooding in Indonesia on NPI production there. Nickel built on this firm
20000 Price and base forecast tone, racing up to $12,300 per tonne. As well as broader macro factors being
APEX consensus price-supportive – such as a weak dollar, a dovish Fed, optimism that US-
18000
China trade relations are thawing, and rallying gold and oil prices no doubt
16000 attracting money into commodity baskets – nickel has benefitted from
bullish developments in its own market.
14000
l INSG data: In its latest data bulletin, the INSG revised higher its
12000
estimate for the Q1 deficit in the global refined nickel market, to 17,800
10000 tonnes from 17,200 tonnes previously. And it reported a provisional deficit
of 9,400 tonnes in the month of April.
8000
Q4 14 Q4 15 Q4 16 Q4 17 Q4 18 Q4 19 Q4 20
Source: Fastmarkets l Premiums: Fastmarkets’ premium assessment for 99.8% purity, full
plate nickel, in-warehouse Shanghai, jumped to $360-420 per tonne last
week, up by 66% from $220-250 per tonne a week earlier. That is the
Nickel spot premiums ($/t) premium’s highest range since Fastmarkets launched the assessment
in November 2011. The surge came amid an abrupt opening of the
import arbitrage window in China, the result of a combination of (1)
500 800
low domestic stocks, (2) limited availability of imported cargoes, (3)
concerns about NPI supply disruptions, and (4) rising demand from the
400 stainless steel sector, as slim but resilient margins are still motivating
600
mills to maximise production even though stocks are high and local
300 downstream demand is unspectacular.
400
200 l Onca Puma outage: Vale’s Onca Puma ferro-nickel complex has had a
tough time since its start-up in 2011. Furnace rebuilds were soon required
Shanghai 99.80% 200
100 and in 2015 nominal capacity was reduced to 25,000 tpy of contained
EU briquettes nickel, from its original 54,000 tpy nameplate level. Courts ordered
US melting grade [RHS]
0 0 mining to be suspended from September 2017 and since then production
Jul 17 Jan 18 Jul 18 Dec 18 Jun 19 has been in decline from 7,100 tonnes in Q3 2017 to 4,300 tonnes in Q1
Source: Fastmarkets 2019. Q2 is now likely to be lower still following the latest judicial orders to
halt all operations announced last week. Furthermore, Q3’s production
level will be zero if Vale’s appeal is slow to be heard or overturned.

l Other ferro-nickel disruptions: Onca Puma’s stoppage follows a 20%

production cut this year enforced on loss-making Larco of Greece, which
is the highest-cost ferro-nickel producer in the world and is fighting for
its survival. And this week we hear of another metal leak at Glencore’s
Koniambo complex in New Caledonia, which forced operations there
to be suspended. Together with disrupted NPI supply in Indonesia due
to flooding in Sulawezi, these developments should start to tighten the
ferro-nickel market and help the case to restore a premium to LME after
it swung to a discount late last year.

Nickel price forecast ($/tonne) Fastmarkets MB research outlook

16,000 The latest INSG data showed another decent-sized supply deficit in
15,000
the global market in April, physical premiums are on the rise and have
14,000
13,000
even reached record highs in China, while Vale and Glencore have
12,000 both reported unplanned ferro-nickel production disruptions in the
11,000 past week. On top of this, nickel’s technical charts are looking more
10,000 constructive and there have been some more supportive themes on
9,000 the macro side, including dollar weakness and thawing US-China
8,000
trade tensions.

Source: Fastmarkets MB research

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 12

 Molybdenum highlights
Strike outages support molybdenum prices despite gloomy
demand outlook
US ferro-molybdenum vs OCTG prices Molybdenum was one of the few ferro-alloy markets to see price
improvement during June, largely due to supply concerns in response
FeMo ($/lb) [LHS]
to industrial action in Chile at Codelco and Molymet. The uncertainty
15.00 Seamless OCTG J/K55 casing ($/t) (RHS) 1,800
regarding the disputes and the potential loss of supply have supported
14.00 1,700
molybdenum prices despite the faltering outlook for the carbon and
13.00 1,600
stainless steel industries.
12.00 1,500

11.00 1,400
Earlier in June, unionised workers at Molymet's main production unit went
10.00 1,300 on strike after rejecting the Chilean molybdenum producer’s latest offer
9.00 1,200 in their labour negotiation process. The unit is now under maintenance,
8.00 1,100 and the company does not envisage any impact on production. The Nos
7.00 1,000 plant processes molybdenum concentrates and produces molybdenum
6.00 900 oxide and ferro-molybdenum, with a 2018 output of 86 million lb of
molybdenum. Molymet currently supplies almost one-third of world
demand for molybdenum products.
Source: Fastmarkets

The assessed price of European ferro-molybdenum, min 65%, in-

Crude oil prices vs. US FeMo prices warehouse Rotterdam, was at $28.30-28.60 per kg. Molybdic oxide prices
are unchanged this month, with few deals completed either in Europe or
Oil ($/bbl) [LHS] FeMo Price ($/lb) Busan, South Korea. The latest assessed price of drummed molybdic oxide,
160 45 in-warehouse Rotterdam, was at $12.30-12.35 per lb, unchanged over the
140 40 past few weeks, with only small movements either side of that range.
120 35 With demand set to drop heading into the seasonal summer slowdown,
100
30 relatively tight oxide production may be outweighed by declining end-user
80
25 demand in the steel sector for ferro-alloys.
20
60
15 In the US, the ferro-molybdenum market was assessed at $13.40-13.60 per lb
40 10 in-warehouse, up from $13.10-13.40 per lb last month. The price improvement
20 5 may be short-lived, however, as the increase tracked earlier moves higher
0 0 in Europe and has US steelmakers have bought material ahead of their
smelting schedules through August. Persistent weakness in US steel product
prices, and more specifically for molybdenum, prices for steel tube and pipe
Source: Fastmarkets MB research, EIA used in energy applications, will also present a challenge for molybdenum
consumption and prices in the near term. As seen in the accompanying
chart, US ferro-molybdenum prices are highly correlated with US OCTG
prices, and will likely track seamless prices lower in the coming months.

Following on from news last month that China responded to new import
tariff rates on Chinese exports into the US with its own tariffs on imports of
ferro-alloys and minor metals, China will now allow importers to apply for
tariff exemption on US metal concentrates. Molybdenum products may be
one of the US metal products that are exempted from the tariffs. The second
round of applications for tariff exemption, which covers most of the metals
concentrates, will run from September 2 to October 18. Chinese imports of
molybdenum products from the US are set for a tariff rate of 20%.

European FeMo price, $/kg Fastmarkets MB research outlook

34
While industrial action and the resulting uncertainty and potential
disruption to supply are propping up molybdenum prices for now,
32
we suspect both US and European spot market prices will drift in the
30 coming weeks due to declining demand conditions globally. The recent
28 slide in oil prices will also exert pressure on molybdenum prices, as
26 demand for molybdenum-containing steels from the energy sector
recedes. Our base case expectation is for molybdenum prices to trend
24
stable to lower in the near term, although prolonged labour shutdowns
could improve the underlying supply-demand balance and send
Source: Fastmarkets MB research
molybdenum prices higher during H2 2019.

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 13

 Vanadium highlights
Vanadium prices appear to be nearing a floor, potential for
improvement in Q3 2019
Ferro-vanadium (70-80%) prices, $/lb Vanadium prices suffered further losses during June, in line with our
60 expectations, but signs are emerging that vanadium prices globally are at or
55 near a floor. The vanadium pricing collapse was in large part spurred by a lack
EU US of Chinese government enforcement of the new rebar standards that went
50
45 into effect in November 2018. The downward price correction that ensued
40 was needed, as vanadium prices had soared to unsustainable heights, but
35 the speed and the depth of the trough outpaced expectations. Steel buyers
30 minimized vanadium purchases as prices began to decline, not wanting to be
25 caught with high-priced inventories in a declining market, while ferro-niobium
20 suppliers also made inroads into the Chinese market as a cheaper substitute
15 for ferro-vanadium. Ferro-vanadium prices now appear to have found a floor,
10 with indications that inspections of rebar facilities by the Chinese authorities
5 will begin imminently, spurring additional ferro-vanadium purchasing by
Chinese consumers, with ferro-vanadium also regaining competitiveness via
ferro-niobium pricing. Moreover, plunging vanadium prices over the past six
Source: Fastmarkets MB research months, which has rendered high-cost production capacity non-competitive,
together with rising environmental concerns, have limited the return of stone
coal producers, and in turn is helping to tighten vanadium supply.

Chinese ferro-vanadium export prices are around $35-37/kg fob, with $35/kg
emerging as the bottom of the market, while Chinese vanadium pentoxide
prices are stable at $7.90-8.20/lb fob. European ferro-vanadium prices have
slipped to $34.20-35.50/kg on aggressive offers for large tonnages, while
European vanadium pentoxide prices are down to $7.00-7.95/lb. US prices
slid to $17.50-18.00/lb in June.

The medium- to long-term outlook remains promising for the ferro-

vanadium industry. Even with the recent price collapse, ferro-vanadium
prices remain well above long-term averages and underlying demand
prospects remain solid. Producer confidence in the market is evident in AMG
Vanadium’s recent announcement that it will be expanding its vanadium
production capacity by 6m tonnes per year through the construction of a
second facility in the state of Ohio in the US. Construction is to commence
in summer 2019, with a target completion date of 2021. We expect ferro-
vanadium prices to be at or rapidly approaching a floor, with near-term
stability followed by higher prices later in Q3 2019.

Tungsten highlights
Absence of demand to continue to pressure prices lower
European ferro-tungsten (75%) prices, $/kg Ferro-tungsten prices fell to a two-year low in June, as ample supply collided
with weakening demand from the industrial sector. European ferro-
45 tungsten prices have slipped to $29.00-30.00/kg from $32.50-33.50/kg last
month. There is little prospect for improvement in European tungsten prices
40 in the near term, with reports of ample supplies of material in Rotterdam,
while consumers are said to be well covered with material, and not looking to
35
buy until late in Q3 2019.
30
Prices in China also continue to falter, although, prices may find some
much-needed relief on news of flood-related outages at several of Jiangxi
25
Tungsten’s mines. Demand for tungsten concentrates has been declining
20 in China as several domestic APT refiners announced they would be
temporarily halting production in early June due to poor market conditions.
Chinese tungsten concentrate prices were still falling in Fastmarkets’ latest
assessment, but reduced supply could help prices find a floor. We remain
Source: Fastmarkets MB research cautious on tungsten prices, however, given weak demand conditions, and
continue to expect prices to trend stable to lower in the near term.

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 14

Fastmarkets MB ferro-alloys market tracker | 26 June 2019 15
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