INT’L FERRO-ALLOYS CONF: Eight things we learned in Lisbon

Date: Nov 28, 2017

Here are eight things we learned when the ferro-alloys community gathered for a busy week of meetings and contract negotiations in Lisbon at Metal Bulletin’s 33rd International Ferro-alloys Conference.

Discounts against noble alloys benchmarks are tightening, and in some cases, disappearing 
After a year of environmental inspections in China and improving demand from steel mills, sellers of noble alloys have gained the upper hand in negotiations for 2018 contracts, market participants told Metal Bulletin on the sidelines of the conference.

In the case of ferro-tungsten, buyers have agreed to no discount against the Metal Bulletin in-warehouse Rotterdam price assessment in some instances, with supplies from Russia expected to be limited in 2018. In the ferro-molybdenum market, negotiations are underway regarding discounts around 1-2%, while in the ferro-vanadium market, discounts have shrunk to lows of 3%.

US bulk alloy negotiations point towards diverging discounts
Although most bulk alloy 2018-contract negotiations are showing tighter discounts, some divergence has been seen in the early stages of long-term negotiations in the US, market participants told Metal Bulletin.

While spot prices for ferro-chrome and manganese alloys held premium positions for much of the year compared to the global market, discounts have been largely reigned in in comparison to the previous year, with the exception of high-carbon ferro-manganese. Mating season negotiations opened with discounts at 6%, yet market participants indicated that discounts have since widened to 8%, with some fearing it may stretch further.

“Some suppliers seem resigned to the fact that we may be at a premium on the index, so they will respond to that with higher discounts,” a supplier source explained.

Meanwhile, discounts for other bulk alloy producers are down marginally from the previous year, largely holding in the low-to-mid single digits for ferro-chrome and ferro-silicon, according to conference delegates.

Negotiations overall remain in the early stages, with the majority still to be settled as of last week and room for discount trends to shift, market participants noted.

Mating season arrives later after a volatile year 
Big swings in prices have seen ores and ferro-alloys prices reach multi-year highs over the past 12 months, with sharp turns higher and lower. The volatility means both buyers and sellers have been content to delay their annual purchasing discussions until slightly later this year, in case of another pronounced move.

Ultimately, though, buyers have held the upper hand in 2018 negotiations, with improved demand from mills leading to concerns of restricted material supply.

“You’ll get an offer and that’s pretty much what the price will end up being – you have to accept,” a trader source said on the sidelines of the conference.

Producers of battery-grade V2O5 powder seeking new way to price their material 

It’s no secret that interest in batteries is heating up, and while vanadium redox batteries (VRB) may still be a few years away from the mainstream, forward-thinking vanadium producers are thinking about how to price their material.

There were calls from the sell-side for a stand-alone price amid concerns that by securing their material into multi-year, fixed price contracts, they run the risk of missing out on rising prices should VRB demand take off. Proposals to tie contracts to existing references for V2O5 flake are similarly unappealing, since the battery-grade powder market is likely to display its own supply-demand fundamentals once activity increases.

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