August 4, 2014
By Bob Matyi

Felman starts second WV silicomanganese furnace: union

Felman Production is producing silicomanganese again and has started the second of three furnaces at its 105,000 mt/year plant in New Haven, West Virginia, having restarted the first furnace a month ago, an official with the United Steelworkers union told Platts on August 4.

The facility reopened last month following a year-long shutdown.

"We have started a second furnace and we are producing silicomanganese," Roy Martin, vice president of USW Local 5171, said in an interview "We aren't up to full production yet; we have had some complications with furnaces. We hope to work the bugs out soon."

Martin did not detail the nature of the furnace problems, and Felman representatives could not be reached for comment.

Felman has yet to say when the third furnace will be restarted, although ferroalloys market sources have speculated that the timing or likelihood of the third furnace restart will depend on how annual contract negotiations with steelmakers for silicomanganese supply in 2015 go in the fourth quarter of this year.

About 135 union employees are working at the plant — an increase over the roughly 100 recalled when the restart began on July 1, Martin said. "We are going in the right direction," he said.

Felman is one of two producers of silicomanganese in the US. Eramet Marietta also makes silicomanganese at its plant in Marietta, Ohio.

The domestic market for silicomanganese is about 400,000 mt/year, meaning the New Haven plant represents about 25% of the market when producing at full capacity.

Felman, a subsidiary of Florida-based Georgian American Alloys, decided to restart the plant after the West Virginia Public Service Commission approved a new special electricity rate for the facility.

Under the new power arrangement, initially endorsed by the PSC in late March, Felman receives a discount of up to $9 million annually on its electricity costs from Appalachian Power, its longtime supplier and an American Electric Power subsidiary.

Felman said the power discount should enable New Haven to be more competitive with other silicomanganese producers around the world.

According to several trade sources Felman, together with its parent company, had a combined share of just over half of the US market before Felman stopped producing last year, made up of the 105,000 mt produced in the US and the rest from imports from Georgia in eastern Europe.

Several sources said they do not believe the two companies lost much, if any market share, as a result of idling the West Virginia plant, as they were able to fulfill long-term contracts with stockpiled inventory, silicomanganese imported from Georgia and material bought periodically on the spot market.

On July 7, Georgian American Alloys said it was shifting three furnaces at its facility in Georgia to ferromanganese production from silicomanganese, starting in August, as a result of the restart of silicomanganese output in West Virginia.

The only major difference Felman's production suspension made to the US silicomanganese market was on long-term contracts, according to market sources. Some steel mills did not conclude annual contracts for 2014 supply in the last quarter of 2013, as they were unsatisfied with the level of discounts they were offered in formula pricing by the major silicomanganese producers and suppliers. One buyer at a steelmaker, where Felman had been an incumbent silicomanganese supplier, told Platts earlier this year that his company had chosen to buy its first-quarter requirements and a large portion of the second quarter on a quarterly basis, because of the uncertainty, at the time, over the timing of a restart at Felman and the small level of formula discounts being offered.

The company is understood to have since covered the rest of its 2014 silicomanganese requirements on a long-term basis.