electricity prices
Firstly, there is little probability of a significant increase in electricity prices. The energy-saving and carbon reduction action plan proposes to strictly prohibit the implementation of electricity price discounts for high energy consuming industries. Currently, the Inner Mongolia production area implements differential price increase policies for restricted equipment enterprises such as ferroalloys, calcium carbide, and coke industries, while the Ningxia production area has not provided preferential electricity price support for the ferroalloy industry.
Therefore, the actual impact of "canceling discounts" on electricity prices is limited. If we look at electricity from the perspective of coal, it is different from the tight fundamentals of thermal coal in 2021. In June, the storage of thermal coal in warehouses was high and downstream coal reserves were sufficient. The possibility of electricity prices rising due to rising coal prices is also unlikely.
blue charcoal
Secondly, it is difficult to significantly increase the price of blue charcoal. The energy-saving and carbon reduction plan also mentions "reasonable control of the scale of semi coke (blue coke) industry". In 2023, Shaanxi has basically completed the demolition and renovation of blue charcoal furnace types with an annual production capacity of less than 75000 tons. According to Coal Chemical Network, as of the end of September 2021, Yulin has phased out 238 blue charcoal furnaces with a capacity of less than 75000 tons, involving a production capacity of 11.975 million tons; As of the end of December 2022, 432 blue carbon plants with a single furnace production capacity of less than 75000 tons from 32 metal magnesium enterprises in Yulin City have been dismantled, with 135 units and 124 units shut down. In 2023, Shaanxi has basically completed the demolition and renovation of blue charcoal furnace types with an annual production capacity of less than 75000 tons. If this action plan is implemented locally, the focus may no longer be on phasing out outdated production capacity of blue charcoal, but on further regulating production capacity. The impact on blue charcoal supply is expected to be limited, and the focus of blue charcoal is still on cost - coal.
In most parts of the country, the temperature is not high, there is more precipitation, and the performance of hydropower exceeds expectations, which has a bearish impact on the coal consumption of thermal power. The daily consumption of thermal coal has significantly decreased year-on-year, and it is expected that thermal coal will continue to accumulate on the basis of high inventory. Coal prices are expected to be difficult to rise significantly, and it is difficult to raise the price of blue coal significantly.
In summary, the production cost of ferrosilicon in June is controllable and there is no significant upward trend.
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