The ferrosilicon market continues to consolidate with no clear directional bias. Futures edged lower while spot prices held steady amid subdued trading. The fundamental picture remains a "weak balance" – cost support underpins the downside, while weak demand caps the upside. With no fresh catalysts in sight, prices continue to trade within a narrow range.
Production in major regions continues to recover, with operating rates gradually moving higher. Latest data shows the national operating rate among 136 independent ferrosilicon enterprises stood at 33.12%, up 1.33 percentage points from the previous period, while average daily output rose 2.25% month-on-month. Industry inventories have edged higher, with producer stocks increasing 8.30% week-on-week.
Despite the supply expansion, producers remain reluctant to sell at discounted levels. Against a stable cost backdrop, the prevailing mindset is one of loss prevention, with manufacturers showing limited willingness to cut prices. Market participants largely adopted a wait-and-see approach, keeping spot quotes stable.
Steel mill demand remains soft. Overall steel production intensity has moderated, with mills maintaining a cautious, just-in-time procurement strategy and applying downward pressure on tender prices. Purchasing pace is slow, and end-user essential demand lacks upward momentum. Market inquiries remain subdued, spot transactions are generally tepid, and there is no sign of concentrated restocking.
On the positive side, several steel mills announced procurement tenders for July, including Lingyuan Steel (750 tonnes), Yonggang (300 tonnes of high-purity ferrosilicon), and Longteng Special Steel (1,000 tonnes). Hebei Steel's July tender volume for 75B ferrosilicon reached 3,380 tonnes, up 780 tonnes from the previous round. While these tenders provide some support, they have not been sufficient to shift the broader demand picture.
The magnesium metal market remains relatively stable with visible bottom support. Small-scale producers have limited room for price concessions, and low-priced supply is scarce. However, magnesium producers are entering their seasonal maintenance period, and downstream demand remains subdued, limiting any significant contribution to ferrosilicon consumption.
The ferrosilicon market is expected to maintain its range-bound consolidation pattern in the near term, with a slight downside bias.
On the supportive side, higher electricity costs provide a firm cost floor, stable semi-coke prices reinforce cost support, ongoing steel mill tenders offer intermittent demand support, and producer reluctance to sell at losses limits supply pressure.
On the constraining side, supply continues to recover with operating rates gradually rising, end-user steel demand remains weak due to seasonal factors, elevated inventory levels cap price upside, and fresh catalysts are lacking.
The fundamental picture remains one of "weak balance" – cost support underpins the lower bound while demand weakness continues to weigh on the upper end. With no new market drivers on the horizon, spot prices are likely to continue fluctuating within a narrow range.
Monthly steel mill tender results and procurement volumes; production adjustments and maintenance schedules across major producing regions; any further electricity tariff developments in other producing areas; magnesium metal market trends and their impact on ferrosilicon consumption; inventory accumulation or drawdown trends.
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