Ferbasa Ferro-Alloys Q1 Results Show Domestic Strength Amid Export Challenges

Ferbasa

Brazilian ferro-alloy producer Ferbasa delivered mixed Q1 results with domestic ferro-alloys sales surging 30% while export volumes declined significantly. The company's performance reflects broader industry challenges including US anti-dumping measures and global protective tariffs affecting ferro-silicon markets.

Domestic Market Recovery Drives Growth

Ferbasa ferro-alloys total sales increased 10.2% year-on-year to 69,563 tonnes in Q1. The growth was primarily driven by robust domestic demand as Brazil's steel sector engaged in restocking activities. Domestic sales reached 38,682 tonnes, representing a substantial 30% increase compared to the previous year.

However, export performance presented a contrasting picture. Export sales dropped 7.3% annually to 30,851 tonnes and fell 20.5% quarter-on-quarter. The company attributed this decline to tariff pressures, market uncertainty, and persistent logistical challenges affecting international shipments.

Production Costs and Market Pressures Impact Operations

Despite increased sales volumes, Ferbasa ferro-alloys production decreased 1.3% year-on-year to 75,821 tonnes. Chromium alloy production fell 1.8% to 50,372 tonnes, while silicon alloy output declined 0.2% annually to 25,491 tonnes. Nevertheless, silicon alloy production showed quarterly improvement with a 20% increase.

Meanwhile, the company faced mounting cost pressures. Production costs rose significantly during the quarter, with electricity and chrome ore representing the primary cost drivers. These increases highlight the ongoing challenges facing ferro-alloy producers in managing input costs while maintaining competitive pricing.

Global Trade Tensions Create Market Uncertainty

The ferro-silicon market faces heightened uncertainty due to escalating trade protection measures. US anti-dumping actions and protective tariffs worldwide have created challenging conditions for exporters. As a result, market participants remain cautious about international trade prospects.

Therefore, Ferbasa's strategy of strengthening domestic market position appears well-timed. The company generated R$549 million ($97.62 million) in Q1 revenue, up 7.9% year-on-year, supported by higher ferro-alloy revenues and favorable USD-BRL exchange rates.

The Metalnomist Commentary

Ferbasa's Q1 results exemplify the current ferro-alloy industry dynamics where domestic market strength compensates for challenging export conditions. The company's ability to capitalize on Brazilian steel sector restocking while navigating global trade tensions demonstrates strategic market positioning in an increasingly protectionist environment.