Ferbasa Ferro-Alloy Production Rises as Prices Weigh on Earnings

Ferbasa

Ferbasa ferro-alloy production increased in the second quarter despite weaker prices and higher costs. Ferbasa ferro-alloy production reached 75,406t, up 2.5pc year on year. However, adjusted EBITDA dropped 32pc as electricity and chrome ore costs climbed.

FeSi and ferro-chrome output strengthen

Ferbasa ferro-alloy production was broad-based across product lines. Chromium alloys rose 2.1pc to 51,051t. Silicon alloys rose 3.4pc to 24,335t. High-purity ferro-silicon output surged 27pc and formed 45pc of silicon alloys. As a result, the mix favored higher-spec FeSi demanded by advanced steelmakers.

Sales improved, but margins compressed

Ferbasa lifted ferro-alloy sales 14pc quarter on quarter to 79,000t. Exports jumped 29pc, while domestic sales rose 1.1pc. Nevertheless, lower global ferro-alloy prices pressured revenue. Therefore, EBITDA fell to R$67.6mn, down 32pc year on year. Power inflation and chrome ore costs further tightened margins.

Trade policy adds risk to outlook

North American steel tariffs rose from 25pc to 50pc. That shift could curb Brazilian steel output and indirect demand for alloys. Meanwhile, an EU safeguard probe into ferro-silicon and manganese alloys could reshape import access. Consequently, contract pricing and regional allocation decisions remain critical for 2H.

The Metalnomist Commentary

Ferbasa’s near-term playbook is clear: prioritize high-purity FeSi, optimize furnace dispatch, and hedge power exposure. Watch tariff pass-through and EU safeguards, which will influence realized prices more than volumes. Cost discipline and product mix will determine whether output gains translate into cash flow.

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.

Ferbasa's 2024 Ferro-Alloy Output Falls Amid Weak Global Steel Demand

Ferbasa

Brazilian producer faces falling prices, lower domestic sales, and volatile quarterly output across chromium and silicon alloys.

Ferbasa, Brazil’s leading ferro-alloy producer, reported a 1.5% year-on-year decline in total ferro-alloy production for 2024, falling to 301,208 tonnes, driven by a broader slowdown in global steel production and weak domestic demand. The company supplies various ferro-alloys including high- and low-carbon ferro-chrome, ferro-silicon, and ferro-silicon chromium to the steel industry.

While silicon alloy production rose 6% for the year to 99,836 tonnes, chromium alloy output declined slightly by 0.5% to 201,372 tonnes. However, Q4 chromium output fell 3.6% year-on-year to 51,513 tonnes, dragging total output lower for the quarter.

Quarterly Swings and Domestic Market Weakness Pressure Performance

Ferbasa saw Q4 silicon alloy production grow 9.7% year-on-year, but it dropped 21.3% compared to Q3, indicating quarterly volatility. A 6.2% increase in Q4 chromium production helped offset the silicon alloy decline.

Total ferro-alloy sales in 2024 declined 1.8% to 268,623 tonnes, with domestic sales down 8.3%, affected by rising steel imports that undercut local steel output. A 5.3% increase in exports, led by a 12.5% rise in chrome alloy exports, offered partial relief. Silicon alloy exports remained flat year-on-year.

Ferro-Alloy Prices Decline, Revenue Drops 8.1%

Despite stable export volumes, Ferbasa’s net revenue fell 8.1%, due mainly to a 7.6% drop in ferro-alloy segment revenue. This was driven by an 11.6% fall in average dollar prices for ferro-alloys.

The company blamed the pricing pressure on reduced stainless steel production in China, subdued global economic activity, and ongoing U.S. anti-dumping investigations that caused market caution around silicon alloy pricing.

Ferbasa remains exposed to volatile pricing cycles, international trade tensions, and macroeconomic headwinds, which may continue to pressure Brazil’s ferro-alloy sector in 2025.

Brazilian Ferro-Alloy Producer Ferbasa Sees Second-Quarter Production and Revenues Decline

Ferbasa, one of Brazil's leading ferro-alloy producers, reported a slight decrease in its second-quarter production, coupled with a significant drop in revenues. The company announced on Monday that it produced 74,750 metric tonnes of ferro-alloys in the second quarter of 2024, marking a 0.9% year-on-year decline and a 2.7% decrease from the previous quarter. The production of chromium alloys, which accounted for 50,067 tonnes of the total, fell by 0.3% compared to the same period in 2023.

Additionally, the production of silicon alloys dropped by 2.1% year-on-year to 24,683 tonnes. This decrease in production was mirrored by a sharp decline in revenues, which fell by 17% to 522 million reals ($95 million). The company attributed this revenue drop to lower trading volumes and a 13% decrease in the average dollar-weighted price of ferro-alloys in the first half of 2024 compared to the previous year.

Ferbasa's sales volumes also suffered, with total ferro-alloy sales declining by 6.8% year-on-year to 63,400 tonnes in the second quarter. Domestic sales of chromium alloys plummeted by 21% to 24,770 tonnes, while international sales saw a modest increase of 7% to 16,176 tonnes. Similarly, domestic sales of silicon alloys decreased by 3.1% to 4,788 tonnes, but international sales grew by 7% to 17,682 tonnes.

The company faced additional challenges, including logistical difficulties, such as a shortage of containers and operational restrictions in key shipping routes like the Suez and Panama canals. These factors, combined with decreased demand from Brazil's domestic steel industry and recent protectionist measures in the U.S., have compounded the difficulties faced by Ferbasa.

US Releases Initial Antidumping Duty Rates on Ferro-Silicon Imports from Brazil, Malaysia, and Kazakhstan

FerroGlobe, Ferro-Silicon

The US Department of Commerce has announced the preliminary antidumping duty (AD) rates for ferro-silicon (FeSi) imports from Brazil, Malaysia, and Kazakhstan. The initial duty rates vary by country and producer, with most foreign entities falling below 10%, signaling a moderate level of protectionism against what is perceived as unfair pricing practices in the sector. These decisions come amid an ongoing investigation and could have significant implications for the US ferro-silicon industry.

Preliminary AD Rates for Brazilian, Malaysian, and Kazakh Ferro-Silicon Producers

The following initial AD rates have been determined:

1. Brazil:

• Minasligas: 1.18%
• Companhia de Ferro Ligas da Bahia (Ferbasa): 13.13%
• Ligas de Alumino: 21.78%
• "All others": 13.13%

2. Malaysia:

• OM Sarawak: 6.91%
• Pertama Ferralloys: 9.01%
• "All others": 7.84%

3. Kazakhstan:

• YDD, Asia Ferroalloys, and KazSilicon Metallurgical Combine: 4.22%
• TNC Kazchrome: 6.2%
• "All others": 4.67%

In addition to these AD rates, importers must pay cash deposit rates to the US Customs and Border Protection (CBP). For example, Brazilian importers will be required to pay rates ranging from 1.06% to 13.03% depending on the exporter. Notably, there are no cash deposit requirements for imports from Kazakhstan, further highlighting the complexity of the trade case.

Ongoing Investigation and Potential Impact on US Ferro-Silicon Industry

The Commerce Department’s final ruling is expected by May 17, with an injury determination scheduled from the US International Trade Commission (USITC) by April 29. This investigation is running concurrently with a countervailing duty (CVD) probe into the imports from these countries. The case initially arose from petitions filed by FerroGlobe's US subsidiary and CC Metals and Alloys, two key players in the US ferro-silicon industry, in response to perceived market distortions.

In 2023, shipments from Brazil, Malaysia, and Kazakhstan accounted for 77% (152,073 metric tonnes) of the total US ferro-silicon imports, making this investigation crucial for the local industry.

The outcome of this case will likely affect future imports and pricing dynamics in the US market, as well as the competitiveness of domestic ferro-silicon producers.