Post on 29-Jun-2020
transcript
Energy in the shape of a ferroalloy:
FeSi from a European perspective
Kevin Fowkes
Ferroalloy Industry ConsultantFerroalloy Industry Consultantwww.kevinfowkes.com
15th November, 2010
What is ferrosilicon?
• A ferroalloy of iron and silicon (FeSi), normally ~75% Si
• Used extensively in molten crude steel as a de-oxidising agent
• Also used to add electrical conductivity and corrosion-resistance properties to
steel
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steel
• Average Si content of steel is 0.3%. Many individual grades are much higher
in Si – stainless steel (up to 1% Si), electrical steels (up to 7% Si)
• Around 70% of global FeSi output is used in steel
• Other important applications are for de-carburising molten grey iron for the
production of foundry castings (20% of global FeSi consumption) and for
producing magnesium metal in China (7% of global FeSi consumption)
Global bulk ferroalloy revenues
(billion US$)
FeSi accounts for 20% of the ferroalloy sector, with
projected global revenues of US$11bn in 2010
60
80
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0
20
40
2004 2005 2006 2007 2008 2009 2010F
Silicon metal
Ferrosilicon
Chrome
Manganese
Average industry EBIT margin
The FeSi business has been consistently less profitable
than the manganese and chrome businesses
40%
60%
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-20%
0%
20%
2004 2005 2006 2007 2008 2009 2010F
Manganese
Chrome
Ferrosilicon
Silicon metal
Based on analysis of financial results of 50 major ferroalloy producers
Typical electricity consumption
(MWh per tonne)
FeSi is driven by electricity rather than raw materials –
a fundamental difference from FeMn/SiMn and FeCr
10
15
60%
80%
Raw materials as percentage of
Chinese cash operating costs (2010)
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0
5
10
0%
20%
40%
Ferrosilicon market characteristics
• “Standard” ferrosilicon accounts for ~85% of global FeSi consumption
(Standard FeSi is 75% Si, 1.5% Al, 0.1% Ti, 0.1% C, balance Fe)
• The remaining 15% of global FeSi output is special grades – magnesium FeSi
and inoculants for foundry castings, high-purity and refined FeSi for alloy and
electrical steel production
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electrical steel production
• Standard FeSi production is overwhelmingly dominated by China and Russia
• Special FeSi grades continue to be mainly produced by established western
producers in Europe, N.America and Brazil
Crude steel production since collapse of Lehman Brothers
(Index, Sep 2008=100)
European steel output has recovered only sluggishly,
reducing Europe’s share of global FeSi demand
120
140
160
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40
60
80
100
120
China
N.America
Europe
Asia exc. China
China
Rest of Asia
China
Rest of Asia
World FeSi
Production (2010)
World FeSi
Consumption (2010)
Europe now only represents 12% of world FeSi
consumption and 8% of production
Europe
N.America
S.America
CIS
Africa & Mid East
Europe
N.America
S.America
CIS
Africa & Mid East
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Total volume 6.9 million tonnes
12%8%
StandardCarbon steel
European FeSi
consumption by end-use
European FeSi
consumption by grade
Speciality grades make up over 20% of the European
FeSi market, more than in most other regions
HP, low-Al, low-C
MgFeSi, inoculants
Stainless steel
Foundry
Other
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• The European Commission imposed provisional anti-dumping duties on
ferrosilicon imports in August 2007. The final duty rates were imposed in
February 2008
• The exporting countries affected by the duties were China, Egypt,
Kazakhstan, Macedonia and Russia
Anti-dumping duties have had a significant
impact upon the European FeSi market
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Kazakhstan, Macedonia and Russia
• Since the duties were imposed, there has been a significant reduction in
ferrosilicon exports to the EU from all these countries, most notably China.
Spot prices in Europe now normally trade at a premium
• Duties are for the standard 5-year term but can be subject to interim review.
Macedonia’s duty was eliminated by a review in 2009. A review into the duty
on Russia was instigated in 2010
FeSi anti-dumping duty rates in the European Union
China – Erdos 16%
China – others 29 – 31%
Egypt 15 – 18%
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Kazakhstan 34%
Macedonia 5%*
Russia 18 – 23%**
* Reduced to zero in review, Dec 2009
** Currently subject to review
Market share, EU FeSi market
European producers have significantly recovered their
market share since AD duties were imposed
60%
80%
100%
CISChina
Brazil
Others
AD duties
imposed
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0%
20%
40%
60%
European
producers
Standard 75 FeSi spot prices
(US$/tonne)
Since AD duties were imposed, European FeSi prices
have held a consistent premium over other regions
2,000
2,500
3,000
China export
AD duties
imposed
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0
500
1,000
1,500
2,000 China export
USA
Europe
Chinese FeSi production by destination
(million tonnes)
China’s FeSi exports unlikely to return to 2007-2008
levels due to rising domestic demand and export tax
4
6
Exported
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0
2
4
2004 2005 2006 2007 2008 2009 2010F
Consumed domestically
Elkem Iceland
Finnfjord
Elkem Salten
Elkem BremangerElkem Bjolvefossen
Fesil Rana
A map of the European ferrosilicon industry
NORWAY &
ICELAND
Ferroatlantica
Chateau FeuilletFerroatlantica Cee
Ferroatlantica Dumbria
Ferroatlantica Laudun
Ferroatlantica Pierrefitte
Huta LaziskaOFZ
Silmak
FRANCE &
SPAIN
EASTERN
EUROPE
22%13%2%
Ferroatlantica
Elkem
Share of European FeSi
production
(2010)
Over 50% of European FeSi output is controlled by two
companies, and 98% is controlled by five companies
34%13%
16%
Fesil
Finnfjord
Huta Laziska
OFZ
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Full production cost curve, FeSi
(global ex-plant ranking, excluding taxes and duties)
European FeSi production costs tend to be high, but that
does not necessarily question their survival
European producers
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• The major producers remain leaders in the production of premium-priced
speciality grades, with only limited competition from overseas. The European
producers are also technology leaders in an era of increased environmental
awareness and legislation
• Economics of exporting ferrosilicon from China to Europe are bad, even
Reasons to be cautiously optimistic for the future of the
European ferrosilicon industry
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• Economics of exporting ferrosilicon from China to Europe are bad, even
disregarding the existence of anti-dumping duties. China pulling back from
exporting to other markets has also reduced exports to Europe from other
sources
• Anti dumping duties against China likely to remain in place for next 2-3 years
at least
• Changes in ownership structure of the European FeSi industry are likely, and
should be a good thing
Thank you for your attention today
Check out my websitewww.kevinfowkes.com
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