Elkem will reduce its ferrosilicon sales by as much as 15,000 tonnes in the fourth quarter vs. third quarter 2012. The planned reduction comes as a result of non-sustainable FeSi prices, a weak Euro and expectations of continued low steel capacity utilisation in Q4.
Today’s FeSi price is below a long-term sustainable level for Norwegian ferrosilicon production. One Elkem furnace is already scheduled to be shut down, and a second furnace is currently considered being taken out of operation.
“We are already at price levels that are not profitable for our company. Signals from the steel industry indicate that demand for our product will fall further in the fourth quarter. If this is the case, we have no choice but to reduce our output in an effort to move the FeSi price to a sustainable level,” says Thomas Fredrik Næss, Vice President of Sales & Marketing of FeSi in Elkem.
At the current FeSi price level, and with a NOK/EUR exchange rate of 7.30, no Norwegian plants are profitable. Although Norwegian spot prices for electricity have been low during summer, market prices have picked up again recently, and Q4 contracts are traded at significantly higher rates. Most Norwegian plants does anyway not benefit from low spot prices, due to long-term power contracts.