Ferrosilicon Prices Explained

Ferrosilicon prices largely benefit the increasing use of inoculants in cast iron and a deoxidizing agent in the steel sector. This huge appetite stems from the rising spending on infrastructure which supports the global need for steel. Additionally, the demand for steel and cast iron, coupled with advanced alloying techniques will contribute to its positive market sentiments.

Due to its remarkable abilities such as great strength, hardness, resistance to corrosion, and high temperatures, it finds solid application in the production of steel and cast iron. Thus, propelling ferrosilicon prices in the global market.

Why are ferrosilicon prices fluctuating?

1. Downstream Demand

Ferrosilicon demand is primarily driven by the downstream steel sector, with iron and steel companies playing a crucial role in influencing the ferrosilicon market prices. The monthly bidding prices established by these firms significantly impact the pricing dynamics of ferrosilicon.

Overall, the profitability of the iron and steel industries is a key determinant of ferrosilicon prices, however, the industry often faces pressure to accept prices set by steel companies due to overcapacity and numerous firms in the market.

2. Production Costs

One of the main and consistent components of ferrosilicon’s total cost structure is electricity. When prices fall below the cost of manufacturing, businesses are forced to stop or reduce their production.

Even though semi-coke and other raw material costs make up a small percentage of total expenses, their significant volatility affects ferrosilicon pricing which frequently leads to value variation during times of rising raw material prices.

3. Macroeconomic Situations

The ferrosilicon business mainly serves downstream industries such as iron and steel as well as those engaged in the smelting of magnesium metal. Conversely, the automotive industry serves as the main downstream market for magnesium metal, while real estate and automobiles are the key running markets for the iron and steel industries.

Therefore, the fluctuation of ferrosilicon prices depends on the macroeconomic factors that impact end-demand industries like real estate and car industries.

4. Lack of Ferrosilicon in the Market

When the supply of ferrosilicon becomes limited, it certainly creates upward pressure on its prices. For instance, the supply of ferrosilicon from Brazil in November 2023 was temporarily halted due to a production outage at one of the company’s plants.

Additionally, due to the impact of inflation on freight rates, ferrosilicon prices significantly increased in the global market, causing a decline in Europe’s supply of alloy from Malaysia. The elevated freight prices make Malaysian shipped ferrosilicon less competitive with current European prices.

Which variables impact the price of ferrosilicon?

• Downstream Demand
• Production Costs
• Macroeconomic Situation
• Lack of Ferrosilicon in the Market
• Environmental Regulations
• Market Demand

Where does ferrosilicon come from?

Ferrosilicon is a mixture of silicon and iron in different ratios, forming a solid and crystalline alloy without any smell. It catches fire and explodes when in contact with oxidizing materials, releasing toxic fumes in the presence of moisture.

Additionally, ferrosilicon is mostly used as an alloy to eliminate oxygen from magnesium and steel through smelting. This process involves mixing quartz with carbon coke in the presence of iron or iron ore. Generally, these are the processes in making ferrosilicon:

1. Raw Material Preparation – The main source of silica is quartz, frequently obtained from quartzite or high-purity quartz. Also, coke’s primary source is carbon from coal mines. Iron ore is the source of the iron component used in the ferrosilicon alloy.

2. Mixing and Proportioning – The raw materials such as quartz, coke, and iron are blended in specific ratios according to the intended composition of the ferrosilicon alloy.

3. Smelting Furnace – The combined raw materials are put into a submerged-arc electric furnace, a common type of furnace used in the manufacturing of ferrosilicon. Additionally, electric arcs created between electrodes and the raw material charge often heat this furnace.

4. Smelting Process – High temperatures in the furnace cause quartz to be reduced by carbon, producing silicon and carbon monoxide. Then, the ferrosilicon is produced in the charge as a result of the silicon’s interactions with iron ore.

5. Alloy Formation – The ferrosilicon alloy becomes liquid and is allowed to gather at the bottom of the furnace. Next, depending on its intended usage, the alloy is poured or expelled from the furnace and formed into granules or ingots.

6. Cooling and Solidification – After cooling and solidifying, the molten ferrosilicon takes on the required shape. During this procedure, controlled cooling is used to achieve particular qualities in the finished product.

7. Crushing and Sizing – Ferrosilicon that has solidified is crushed and sized to meet the required particle size distribution criteria.

8. Packaging and Distribution – The final ferrosilicon product is packaged for distribution and commercial use.

What are the uses of ferrosilicon?

Generally, ferrosilicon is used as an inoculant in the cast iron industry to stop iron carbide from forming, especially in thin casting portions where fast cooling takes place. Due to its adaptability and ability to change the characteristics of other metals, it is a desirable material used in many different manufacturing and processing industries.

Thus, it finds various industrial applications because of its unique features, especially in the metallurgy and alloy production process. Some of its key uses are:

1. Steelmaking – It is primarily used in the production of steel as a deoxidizing agent to remove oxygen from steel as it helps produce premium steel such as silicon steel, bearing steel, and high-carbon steel.

2. Foundry – Ferrosilicon serves as a gestation promoter to increase the breeding effect of iron and as an inoculant to accelerate graphitization in the foundry sector.

3. Manufacture of Silicon and Alloys – It is a key component for the synthesis of silicon and numerous silicon alloys that are valued for their endurance to high temperatures and corrosion.

4. Welding Electrodes – Ferrosilicon is used in the welding electrode production process to improve the metallurgical and mechanical properties of the welded connection.

5. Chemical Industry – High-silicon ferrosilicon finds application in the production of siloxane and various other products.

6. Ferrosilicon Powder for Diamond Processing – To concentrate diamonds, ferrosilicon powder is used in the heavy-media separation process in the diamond processing industry.

What is the future price of ferrosilicon?

The anticipated increase in demand for electrical steel necessary for producing motors, transformers, and power-generating devices will further propel the ferrosilicon market and its prices.

Ferrosilicon’s application has become increasingly popular among businesses in the construction and automotive industries to guarantee longevity and corrosion- resistance in automobile bodywork, structural supports, and bridges. It is effectively used in semiconductor manufacturing by alloying it with other metals, which satisfies the electronics industry’s high demand.

Furthermore, the increasing utilization of this commodity as a deoxidizer holds a dominant market share of 35.4% and is expected to grow at a lucrative pace until 2032. Thus, the price of ferrosilicon will be $1,299.55 per ton in 2028, with an estimated market value of $10.8 billion by 2026, growing at a CAGR of 3.1%.