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American Metal Market

By Daniel Fitzgerald
January 27, 2014

Supply concerns push up SiMn prices

NEW YORK-Silicomanganese spot prices have surged again as ongoing supply constraints reportedly continue to impact the market.

Silicomanganese moved up to a range of 56 to 57 cents per pound from 53 to 56 cents previously, although reports persist of truckload business being done at 53 cents per pound.

Spot prices have been on the rise in recent months due to supply concerns, prompted by the idling of major domestic supplier Felman Production LLC, Letart, W.Va., and ongoing power issues in South Africa (amm.com, Dec. 6).

"Silicomanganese is supply-driven, not demand-driven," one trader said. "Producers cannot make money and Felman is not running."

"The market has been firm, and there's no question that demand has been better than what people were expecting, but the (price rises) are because of the supply constraints," a second trader said. "Consumers are holding out for the best possible prices."

However, one producer source said consumer demand could cool if silicomanganese prices move too far out of step with similar commodities.

"Silicomanganese is the mover at the moment, but the spread to the European market is not sustainable. European prices are so much lower than in the U.S., so it's only a matter of time before material starts flowing this way," he said. "Unless we see some shift in high-carbon ferromanganese prices, steelmakers will start looking at whether it's better to buy high-carbon ferromanganese and ferrosilicon. High-carbon has strengthened a little bit, but not as much as silicomanganese, and there's usually a correlation between the two."

The price range for high carbon ferromanganese tightened to $ 1,000 to $ 1,020 per long ton from $980 to $1,020 previously. 

A second producer source said that production issues from other major sources are forcing consumers and traders to look further afield for high-carbon material. "I've had traders asking at $1,050 per long ton, but I don't want sell too much too early," he said. "High-carbon should continue to trend up in the next couple of weeks, and I think we'll get to $ 1,050 with no problem."