The FeSi smuggling emerges in China
US and European 75% prices were marginally up based on higher Chinese prices. However, a potential problem is in the making. Sellers report that prices for Chinese material shipped via Vietnam into Mexico are as low as $1,480 per mt, c.i.f. The sellers believe the material was smuggled into Vietnam to avoid the 25% Chinese export VAT; the ferrosilicon was produced in the country's southern provinces. And, some of the smuggled ferrosilicon is also finding its way into Europe .
"Manganese alloys, manganese metal, and silicon has been smuggled for a long time, but this is the first time that significant amounts of Chinese ferrosilicon are coming out," one seller said. "While quantities are not that large now, they could become a real problem. In this market, the lowest price sets the price, and the profit margins for the smugglers are irresistible."
For the most part, buyers only know that they are buying Chinese-grade ferrosilicon and are more concerned about the price than whether the material was legally exported from China.
Prices for legally exported Chinese silicon were higher not only because of the country's energy shortage and expectations of rationing but also currency. The Chinese government is allowing the rmb to appreciate at a higher than expected rate against the US dollar and that will add $30-60 in higher prices to export prices, reseller say. And, with the Brazilian real up almost 50% since the beginning of 2009, shipments to the US don't look that attractive. However, in most cases, sellers don't have an option since they still need to sell into the US or close capacity.
The question is now whether consumers will accept higher prices now that their business is weakening. "It's easy to announce higher prices but it is much harder to actually sell the material," one mill buyer said. “Right now, everything looks bad."
« Back
|