Platts
March 6, 2014
By Anthony Poole

Market players see US ferrosilicon antidumping finding having near-term impact on prices 

Several US ferrosilicon market participants believe the preliminary determination giving a 0% margin on imports of Russian ferrosilicon and a 27.27% margin for imports of Venezuelan material, announced on March 5, could have a near-term impact on the US price of the alloy, even though the antidumping investigation is not complete, sources said on March 6.

On March 5, the US Department of Commerce issued its preliminary determination, following a petition filed by the US domestic industry in August.

The determination came as a surprise to several who were not expecting Russia to be given a 0% duty.

"I'm cheering the Russians all the way with a zero percent margin, because it's going to make it much, much harder for the domestic industry to prove injury in the remaining stages of the investigation and, hopefully, the whole thing will be thrown out, and they won't be able to file again for five years, although the domestics will probably launch appeal after appeal," one source said.

Several sources said ferrosilicon prices in the US rose after August because traders stocked up on Chinese-origin ferrosilicon in anticipation that antidumping duties would be awarded against Russia and Venezuela.

"The question is, what happens to all that ferrosilicon that the traders have accumulated?" asked one producer. "My fear is that after the preliminary determination, they may liquidate and push the price down."

But several sources said that with Venezuela being given a 27.27% margin by Commerce, FerroAtlantica — the only producer in Venezuela — is unlikely to ship any more ferrosilicon to the US between now and the date of the final determination, which is not expected until September for Venezuelan ferrosilicon, and will only sell material it already has in the US.

"That could tighten things up, which may push prices up," a trader said. "But as Venezuela only supplied about 10% of the US market, that may not be enough to stop prices falling if traders liquidate. The Russians supplied about 40% of the US market and can still ship, so far."

A second trader said the remainder of March should bring the remaining second-quarter inquiries from steel mills into the market, which could flush out any weak long positions. "If traders need the cash, they may decide that it's not worth running the risk of waiting to see whether Russia ends up with dumping duties in the final determination, and they could use the second-quarter inquiries to liquidate, which will push prices lower," the second trader said.

After the March 5 announcement, one source said, "The price of ferrosilicon will start falling tomorrow, in that case. The only reason it was this high was because of the investigation and the speculation it generated. Everyone assumed there would be dumping duties and that was that. This changes everything."

Anecdotal evidence of potential selling pressure was already apparent late on March 5 and March 6. "I need to be able to sell at 96.50 cents/lb in warehouse, but I can't get anywhere near that price," one source said. "The best I can manage is 94.5." The majority of in-warehouse transactions continued to be reported in the 98-100 cents/lb range this week.

Last month, the raw materials buyer at a large US steelmaker also said the US ferrosilicon price had been inflated by the investigation. "The price should really be more like 94 or 96 cents. The demand is no better this year than last," the buyer said.

On March 5, the Platts weekly assessment for standard-grade ferrosilicon (75% Si) was unchanged at 98-100 cents/lb, basis in-warehouse major US hubs.

Other sources said that while the investigation-related speculation had contributed to higher prices, the US market was also being supported by logistical issues related to weather.

"I haven't unloaded a barge in Chicago since early January, because they're not getting through," a third trader said. "How can they get through when there's 10 inches of ice on the Chicago River? Congestion is really bad on the whole of the river system, and that's what's supporting ferroalloys prices, and not just ferrosilicon."

Inland road distribution bottlenecks, also caused by winter's refusal to release its icy grip, are adding further support to ferroalloys, market sources said.

Meanwhile, William Kramer of DLA Piper, the attorney acting for the domestic industry — Globe Specialty Metals, CC Metals and Alloys and two trade unions — said there was a long way to go in the investigation before any conclusions could be drawn.

Asked if an appeal would be filed, Kramer said in an email: "The investigation of the Russian imports has not reached the point at which an appeal would be filed. Major steps remain to be taken by the Department of Commerce, including on-site verification of the completeness and accuracy of the data the Russian parties submitted to the Department."

He added that, after the verification process was completed, "there will be a full briefing and hearing process before the Department in which we will have the opportunity to contest the preliminary determination on legal and factual grounds."