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American Metal Market

By Daniel Fitzgerald
November 25, 2013

Silicomanganese suppliers seek reduction in discounts


NEW YORK - Silicomanganese suppliers are chasing a reduction in discounts for 2014 contracts, although ongoing uncertainty over Felman Production LLC's petition for a special electricity rate for its plant in New Haven, W.Va., may see some consumers lean more heavily on the spot market next year.

Suppliers told AMM that contract talks are unlikely to be concluded before Thanksgiving, adding that they are pushing for smaller discounts off independently assessed prices than those incorporated in 2013 contracts.


Spot silicomanganese prices were in a range of 51 to 53 cents per pound Nov. 21.


"There is a sense that discounts have gotten out of hand, and even some consumers know that the producers cannot survive with these discounts," one supplier said. "Whatever the discount level was last year, the supply industry is looking for about half of that."


"If suppliers are smart, they won't screw too much with the discount levels, because consumers have to feel like they're getting something," a second supplier added. "I think initial quotes will be close to flat or a 1-percent discount, and then incumbent suppliers will get a last look. Personally, I think 51 and 52 cents per pound are already discounted levels for silicomanganese."


However, the push for smaller discounts, coupled with uncertainty over supply due to Felman's current lack of production, may be encouraging consumers to delay a decision over long-term contracts well into 2014.


Letart, W.Va.-based Felman has petitioned the West Virginia Public Service Commission for a special electricity rate (amm.com, Sept. 3), with evidentiary hearings for the request scheduled for December (amm.com, Nov. 13).


"Some consumers are looking at the offers they're getting and are probably not too excited about discounts they're seeing, and if Felman restarts it will change the equation," a third supplier said.


"If (suppliers) are setting discounts of about I to 2 percent, the consumers may think, ‘I'll take my chances in the spot market.'"