29th International Ferro-Alloys Conference Karl Liu General Manager L/O/G/O SINO-MINEMET Intl Co (China) www.themegallery.com Nov. 10-Nov. 12, 2013 Barcelona,Spain
ABOUT SINO-MINEMET Founded in 1999 by China National Coal Energy and became shareholdings in 2005. Export Coal, Coke, Metals and Ferroalloys; Import Ores, alloys and scrap, Coal related Machines 2010 invested in Metallurgical CaSi Plant, 40K mt/pa with top grade quality. Licensed A Class company in exporting ferroalloys. Major exporter of FeSi, CaSi, Ca Metal, Mg Metal, Mn Metal, FeV in China.
Outline I. Ferrosilicon Production in China II. Ferrosilicon Demand in China III. Chinese Ferrosilicon Export
I. Ferrosilicon Production in China
1. Global FeSi Production Global ferrosilicon production mainly distributes in China, Russia, USA and Brazil. In 2012, the global ferrosilicon production was about 7.6 million tons, 66% of which were produced in China.
2. FeSi Producers in China Chinese Ferrosilicon production mostly centered in northwest of China such as Qinghai, Ningxia, Inner Mongolia, Gansu and Hunan.
3. Ferrosilicon Capacity in China FeSi capacity kept on rising for over ten years. Up to 2012, China s ferrosilicon capacity reached 11 million tons. The expansion of FeSi capability in recent years was mainly driven up by the blooming demand from steel industry. Besides, under the Chinese policy of energy-saving and emission-reduction, the furnaces of small scale were eliminated, and those of over 30,000KVA are coming into the industry, leading to a continuous enlargement of the total capability.
4. Ferrosilicon Output in China Ferrosilicon output grew up since 2008, but declined in 2012. China produced 4.8 million tons of ferrosilicon in 2012, down by 15% Y-O-Y. Till Q3, 2013, ferrosilicon output was recorded to be 4.28 million tons, and expected to be 5.7 million tons in total year of 2013.
5. FeSi Cost in China 5.1 FeSi Production Cost Ferrosilicon production cost mainly depends on electric power. Under the current technology, the cost structure for per ton ferrosilicon is as follows. Average Electric Power:7,800-8,300KVA(about 9,300KVA for high pure ferrosilicon),accounting for about 60% in the total cost Coke/Semi-coke:890-1,000kg Silica:1,750-1,850kg Electrode paste: 45-55kg Steel scraps:230kg
Electricity Powder up or down? 5.2 Electricity Power Price in China Nowadays, the average electricity price is RMB420/MWH (USD69/MWH) in West and North China and RMB500/MWH(USD82/MWH) above in Central and East China. In addition, the Hydro Power electricity price is seasonal in South China, and average price is RMB370-420/MWH(USD62-69/MWH). In the future, the electricity price will not be raised sharply to a higher level as high decreasing pressures due to weak economy raise in Alloys regions.
Export Tax Removed or Remaining 5.3 Ferrosilicon Export Cost In export trading, 25% of export tariff and 17% of value added tax are imposed on ferrosilicon by the government. The high tax level makes Chinese ferrosilicon softer and weaker in the international market. Furthermore, the high tariff arose some illegal export of ferrosilicon. Insiders News said FeSi export Tax may be cut down to 10% from next year, but that has not been approved.
II. Ferrosilicon Demand in China
1. FeSi Consumption In China, ferrosilicon is mainly used in steel industry, Magnesium industry, foundry industry and export trading. The proportions for them are respectively 68%, 15%, 8% and 8%.
2. FeSi Demand in Steel Industry In 2012, China totally produced 716.54 million tons of crude steel, which consumed about 3.6 million tons of FeSi. Till Q3,2013, China s crude steel output totaled about 587.37 million tons (up by 8% Y-O-Y) and expected to be about 7.74 million tons in total 2013.
3.FeSi Demand in Magnesium In 2012, Chinese total output of magnesium was about 733,000 tons, consuming about 800,000 tons of ferrosilicon. Till 3Q, 2013, the magnesium output was 584,000tons, consuming about 640,000 tons of ferrosilicon. In whole year, about 800,000 of FeSi will be consumed in Mg industry, no more change.
4. FeSi Demand in Foundry FeSi is used as inoculant in grey cast iron and nodular cast iron production. In 2012, the total production of casting was about 42.5million tons, including 20.1 million tons of grey cast iron and 10.9 million tons of nodular cast iron. Ferrosilicon consumption in foundry in 2012 was about 0.5 million tons and expected to stay at the level in 2013 due to the lower growth of casting productions.
5. FeSi Export in China In 2012, China legally exported 454,267 tons of FeSi, down by 26.9% Y-O-Y. Till Q3,2013, China exported 244,532 tons of FeSi, sharply down 24.6% Y-O-Y. The total export volume is expected to decrease further in 2013.
III. Chinese Ferrosilicon Export
1. FeSi Export VS Output in China Currently, 25% of export tariff is collected on ferrosilicon. Due to the high tariff, ferrosilicon export market became shrinking with proportion of export volume in total output dropping to 6% in 2013 from 30% in 2008.
2. Major Importers of Chinese FeSi Ferrosilicon exports from China are mainly shipped into Japan and South Korea. Export volumes to these two countries almost accounted for 60%~70% of total export.
3. Smuggle in FeSi Export Since FeSi export tariff was raised to a high level of 25%, the smuggling action has become more and more severe. It is said that the Chinese smuggled ferrosilicon was around 300,000 tons in 2012. And most of them flowed into Japan and South Korea through Vietnam. Now, Chinese government has been taking severe measures to beat the smuggles, however, the effect is not obvious. We also call on importers of ferrosilicon to reject the illegal materials and buy from the permitted exporters in order to get stable supply and good quality products.
4. Can FeSi Export Tariff Be Cut down? In our opinion, Chinese government is unlikely to remove the export tariff on ferroalloys in order to control the export of H-H-R products (H-H-R: Heavy energy consumption, Heavy pollution and Resource related) However, considering the problems brought by the high tariff and strong appeals from exporters and industry association, the Chinese government may cut down the tariff level of some products. Till now, the 2014 Tariff Scheme hasn t come out and is expected to be issued in Mid-Dec of 2013. In 2013, Chinese government has removed the export tariff of Mg metal, Si metal and Mn metal.
5. Fierce External Competition The traditional ferrosilicon producers such as Russia are expanding the ferrosilicon capability in recent years and sell at a lower price to EU and Asian countries. New ferrosilicon suppliers elsewhere such as Malaysia, Indonesia and etc are entering into the market and scrabbling the market shares. EU s anti-dumping duty on Chinese ferrosilicon prevented the inflow of materials there. Smuggler via Viet Nam and Taiwan still offers a threat to legal exports from China.
Conclusion China will still play the important role in the global FeSi market. Chinese FeSi output and consumption are expected rising, and mainly centered in home. Chinese FeSi export will keep gloomy if the E- tax not removed. Chinese FeSi is still competitive due to its low production cost.
Karl Liu (General Manager) TEL:86-10-85597955 FAX:86-10-85597981 Email: karlliu@sino-minemet.com Website: WWW.SINO-MINEMET.COM Thanks for support by www.ferro-alloys.com Thank You!