Ferro Silicon Advances On Tight Fundamentals And Policy Optimism

Ferro silicon markets extended gains in early March trading, driven by strengthening fundamentals and growing optimism surrounding policy support measures. Zhengzhou Commodity Exchange futures for May delivery settled at RMB 5,764/ton, gaining 2.20% or RMB 124, with open interest declining by 14,296 contracts .

Physical market activity accelerated as producers implemented upward price adjustments amid diminishing low-priced inventory. "Market sentiment has notably improved, with transaction volumes picking up and sellers increasingly confident in holding firm offers," reported a Ningxia-based trader. The 72% silicon grade natural block now commands RMB 5,200-5,300/ton ex-works cash inclusive of tax, while 75% material trades at RMB 5,850-6,000/ton .

The supply situation continues tightening, although (Ningxia) witnessed one enterprise restarting three submerged arc furnaces, adding approximately 300 tonnes daily production. February concentrate registration closures have shifted market attention to subsequent warehouse warrant recovery patterns .

Steel sector demand presents mixed signals. Daily hot metal production reached 2.3328 million tonnes, increasing 27,900 tonnes from prior week levels. However, steel mills maintain relatively comfortable inventory positions, with ferro silicon stocks averaging 18.72 consumption days-up 1.2 days month-on-month-resulting in cautious procurement pacing .

The magnesium industry continues providing stable demand support, with (Shaanxi) 99.90% grade magnesium quoted at RMB 16,700-16,800/ton (factory-gate cash including tax) and stable production sustaining regular ferro silicon offtake .

With political advisory meetings approaching, market expectations for growth-stabilizing policies have strengthened, lifting sentiment across ferrous complex commodities. However, analysts caution that while magnesium demand remains steady, steel consumption expectations lean toward the weaker side, suggesting limited upside potential in the immediate term .