Ferroalloy Trading

More than 85% of ferroalloys produced are used in the steel manufacturing industry. Ferroalloys have been used in the production of steel since the late 1800s as an economical method of introducing elements into the steel melt. Not only was this way much easier and more cost effective than making pure elements solely for use in steel making but ferroalloys also have a much lower melting temperature.

Ferroalloys play an intrinsic role in the steel industry; for example, manganese is essential in steel production therefore ferromanganese is an additive without which the industry could not exist. Other elements such as aluminium and silicon are required for the majority of steel grades and must be added into the liquid steel. While manganese is required in all steels, it is ferroalloys which allow for the production of different steel grades.

Redstone Commodity Search has had a good exposure to the ferroalloy market due to our connections with the global steel industry (read more). Main contacts for the metals team are with Trading House and Metal Producers. Positions that we have worked on recently include:

  • Ferroalloy Trader, German
  • Ferroalloy Trader, United States
  • Ferroalloy Sales, China
  • Ferroalloy Powder Sales, United States

What are Ferroalloys?

Ferroalloy is the term used to categorise alloys of iron containing a high proportion of one or more other elements such as chromium, manganese, silicon, molybdenum, titanium, tungsten, and vanadium. Most are obtained through a smelting process. Originally produced in a blast furnace, most ferroalloys which require furnace technology are nowadays produced in electrical furnaces.

They are added to steel during the manufacturing process in order to remove impurities from iron melted in the furnace and to achieve the desired degree of specific qualities from tensile strength, corrosion resistance, heat resistance, and yield strength. Ferroalloys go into the manufacture of different types of steel such as stainless steel, carbon steel and alloy steel. Ferroalloys can be subcategorised into:

  • Bulk ferroalloys – produced in large quantities in an electric arc furnace, principally used in steel making and steel or iron foundries.

Examples of bulk ferroalloys include ferrochrome, ferromanganese, ferrosilicon and silicomanganese.

  • Noble/Special ferroalloys – typically produced in smaller quantities but have much more varied uses. They can be used in steel, cast-iron, iron, aluminium and chemical industries. Examples of special ferroalloys include ferroboron, ferromolybdenum, ferronickel, ferroniobium, ferrotitanium, ferrotungsten and ferrovanadium.

The three main segments of the ferroalloy market are ferromanganese, ferrosilicon and ferrochrome. Ferroalloys, in descending order of production are: Silicomanganese, Ferrochromium, Ferrosilicon, Ferromanganese, Ferronickel, Silicon metal, Ferrochromium silicon, Ferromolybdenum, Ferroniobium, Ferrovanadium

How are Ferroalloys Traded?

Physical traders of ferroalloys often trade products between ferroalloy producers and customers such as steel plants. In addition to ferroalloys they could also be trading raw materials for the steel industry (iron ore, chrome ore, coke), carbon, stainless steel, scrap metal, base metals or minor metals, in the form of ores and concentrates. As the steel industry is so closely related to ferroalloys, variation in demand for steel inevitably also affects the ferroalloy market.

Growing construction industries in Brazil, Russia, India, China and South Africa is likely to increase demand for ferroalloys. The involvement of China, India and Japan in the construction and automobile sectors also influence ferroalloy consumption in these countries.

China, India, Japan, Kazakhstan, Russia and South Africa are the world’s top producers of ferroalloys accounting for over 80% of the world’s production, falling in line with the consumption of steel and stainless steel in these countries. Other countries producing a sizeable amount of ferroalloys include Australia, Austria, Brazil, France, Korea, Norway, Spain, the Ukraine and Venezuela.

Derivatives contracts for ferroalloys in the financial markets are not as varied as contracts for other metals however, on the Zhengzhou Commodity Exchange (ZCE), ferrosilicon (SF) and silicon manganese (SM) futures contracts are available. These contracts are most likely used to hedge against risk in a market that has seen some volatility in recent years.

Read More:

Nickel Trading

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