Outlook for the Ferroalloy Market in 2024

Looking forward to the ferroalloy market in 2024, from the resource perspective, ferroalloy is still an industry with excess capacity. While the supply elasticity may decrease in the long run, leading to potential price volatility, it is expected to be limited. The proportion of green electricity usage requirements in the main producing areas is anticipated to gradually rise. However, ferroalloy, being a high-energy industry, may face production instability with the increasing adoption of green electricity, challenging production stability.

Due to the electricity market reform, the fluctuation of electricity price is directly related to the cost of the power plant on the supply side, and the overseas energy crisis is lifted in early 2023, and the decline in thermal coal prices leads to the decline in power plant costs and the fall in electricity prices, resulting in the cost of ferrosilicon in the second quarter of 2023 all the way down, and the price is also all the way down. The stabilization of ferrosilicon prices in the third quarter is related to the peak season of electricity consumption, the stabilization of steel prices, and the slight replenishment of steel mills are also the main reasons for the stabilization of ferrosilicon prices. In addition, at the end of the third quarter, the market worried that the production control policy of "energy consumption dual control" would lead to the supply of ferrosilicon tightening again, which also raised the price of the main contract of ferrosilicon. However, after entering October, electricity entered the seasonal off-season, and the price of ferrosilicon went down. After November, the market entered the peak season of thermal coal demand, and the price of ferrosilicon was mainly shaken.

From the perspective of terminal steel demand, under the suppression of overseas steelmaking capacity expansion and anti-dumping policies, China's direct exports of steel are flat or maintain a small decline. In terms of indirect exports, overseas economic recovery and rigid demand in "One Belt and One Road" countries are maintained, and indirect exports of steel are expected to remain flat or increase slightly. From the perspective of domestic demand, the weakness of real estate is difficult to change, and manufacturing and infrastructure are expected to continue to increase.