International Ferroalloys Conference

Once per year, participants from the global ferroalloy industry meet at the International Ferroalloys Conference (IFA) - for three days packed with content and networking right in the peak-time of the contracting season. This year, the IFA was hosted at the beautiful Corinthia Hotel in the heart of Budapest. Over 800 registered attendees used the gathering to get an update on market trends, price developments and to strengthen their bonds to their business partners.

After two strong years, 2019 has been a tough year for the industry with falling demand and prices. Amy Bennet and Christopher Kavanagh from Fastmarket forecasted in their opening session that prices have floored and will move sideways for the next year. For ferro-chrome in Europe they forecast a price of $0.89/lb on average, whereas prices will peak in Q2/Q3 around 1$/lb. Silicon-manganese will continue its slow decline to end at 915 €/mt at the end of 2020 and ferro-vanadium are expected to stabilize at around $40/kg. With regards to steel production, Fastmarket’s report that the recession in the EU automotive sector is severely dampening regional flat steel demand, to which producers respond with production cuts.

Robert Messmer from the SMR Steel & Metals Market Research shares insights of the global stainless steel market: The reports an increasing dominance of China in the stainless crude steel production, as its share of the global production is accelerating towards 60% at a strong yearly growth rate of 23% per year. Further, the industry cost curve is dominated by Chinese players. To TSI in Indonesia, he refers to as the “Tesla of the STS industry” and Chromeni from India as the new kid on the block, which is about to add capacity for another 3 million tons HRC.

As prices remain on a low level, the need for (cost)-efficiency fuels the industry’s interest in digitization. The ferroalloy-platform Metalshub reports in their keynote speak a strong growth in 2019: An expected revenue of 100 Mio € confirmed deals, over 600 active users and over 2.900 negotiations over the platform after only two years of operation evoke the interest of the audience. Frank Jackel and Sebastian Kreft, the founders of the Germany based startup, elaborate on the fundamental changes in the ferroalloy industry with regards to commoditization of products, increased transparency of prices and the digitization of processes. Reacting to these changes demands for data driven decision making and fast but robust organizational setups. They resume with regard to building digital capabilities: “Is it easy? No; Is it necessary? Yes; So it is important to get started”.

Following a similar line of argument, Michel van Hoey, Senior Partner at McKinsey and Company, states that although there are several digital lighthouse projects, the ferroalloy industry has so far not managed to successfully scale any digital initiatives. According to his analysis, four trends drive the introduction of digital levers into ferroalloys: abundance of data, digitization of processes, automation of the value chain and a change in consumer behavior. As a reaction advanced analytics will revolutionize the quality control from an operational perspective whereas platforms will have a fundamental impact on the commercial parts of the supply chain. He estimates that steel mills can achieve a cost reduction of 2-3% vs. an index reference through digital initiatives. For ferroalloy producers, van Hoey sees significant potential in “digital” sales and marketing initiatives such as using online channels for lead generation.

source: fastmarkets

graphic: marketSTEEL