China’s ferroalloy development prospects

China’s ferroalloy development prospects

The China Ferroalloy Industry Association (CFIA) recently established a 5-year development plan based on the current industrial adjustment situation. The plan calls for the large ferroalloy plants in East China and Northeast China to concentrate their efforts on developing ferrochromium. Meanwhile, the plants in Hunan, Guizhou, Sichuan and Yunnan, all located near abundant sources of manganese, will primarily develop ferromanganese, while plants in Southwest China will concern themselves mainly with ferrosilicon development. The CFIA also insists on tracking global development of the steel industry and customer demand based on advantages on technology, equipment and capital. The CFIA plans to use such information to develop specialty ferroalloys and promote China as a strong ferroalloy producer capable of dominating the world market. In the 1980s, Chinese ferroalloys began pouring into the world market, especially into Europe, South America and South Africa, all of which are traditionally big exporters. At present, China’s ferroalloy export volume to these markets has topped 1 million tons, up from a former 0.04 million tons. However, China’s production capacity totals of 5.5 million tons and actual output totals of 4 million tons are a function of over 2000 manufactures that are characterized by small output, high consumption, low benefits and high cost. Disordered marketing at home and abroad, domestic blind investments, rising import prices and slumping export prices all scream for greater coordination and cooperation between enterprises. A consolidation among ferroalloy enterprises would allow the industry to standardize their operations and establish brand names with worldwide recognition. China’s domestic ferroalloy development depends on both home and overseas resources as well as the establishment of port auxiliary facilities. China’s ferroalloy enterprises are mostly located in areas far from cities, which in turn can create logistical problems due to an insufficient transportation and communication infrastructure. Thus, some inland enterprises make full use of coastal cities to coordinate their warehouses while awaiting opportunities to purchase materials and sell products. Some enterprises even penetrate into the ports of the Netherlands, US and Australia in attempt to compensate for their deficiencies.