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AMM
American Metal Market

By Daniel Fitzgerald
November 18, 2013
 

Ferroalloy sellers look to limit discounts as 2014 talks start 

NEW YORK — Ferroalloys fixed contract talks have begun for 2014, with market participants still predicting a predominance of formula-based deals and sellers trying to limit discounting. 

Some consumers have yet to enter the market, market participants told AMM, although they agreed that negotiations should be in full swing within the next two weeks.

Certain traders seemed resigned to again use formula-based contracts, which would incorporate discounts from independent price assessments by publications such as AMM, and were focused on trying to limit the discounting spread. 

"Originally, discounts were given when times were a bit more depressed, but business conditions are somewhat stronger now and some of these products are in tighter demand," a trader said. 

"Everybody talks about moving away from formula discounts, but when the market is still theoretically oversupplied and it's balanced towards buyers, it will be hard to move away from that," one producer source said. 

The silicomanganese and ferrosilicon markets appear to be creating the most uncertainty, with many players still assessing the impact of Letart, W.Va.-based Felman Production LLC's energy rate petition ( amm.com, Nov. 13) and the U.S. International Trade Commission's anti-dumping probe of Russian and Venezuelan ferrosilicon imports ( amm.com, Aug. 30), respectively. 

"Silicomanganese is still showing more life than others right now, thanks to Felman's lack of activity. ... We're all waiting to see how that pans out. It's creating some uncertainty in the market for customers, not knowing about supply for the new year," the producer said. 

"It will be interesting to see how aggressive the domestic producers are, and how the Russians and Venezuelans will quote for next year," a second trader said of ferrosilicon. "I believe the sentiment has shifted a little bit. I would say the mills are not super anxious right now and that they believe there's enough supply in the pipeline. The hype around the anti-dumping case has gone."