What is the role of ferrosilicon on the route to Net Zero?

The route to Net Zero is expected to increase demand for electrical steels for both motors and transformers using high-grade ferrosilicon. Downwards pressure on emissions from standard steel production will also support higher-quality ferrosilicon demand. CRU Consulting has experience in helping ferrosilicon and other ferroalloys producers or consumers understand the medium and long-term future supply, demand, pricing and cost competitiveness environment globally and regionally. CRU Consulting has applied its expertise in assessing emissions and ESG policy impact in this sector. Contact us to discuss your challenges and how we can help you.

ESG-driven changes in steel will impact ferrosilicon demand

Ferrosilicon (FeSi) is an alloying element in the production of steel and iron castings. Today, standard-grade ferrosilicon (FeSi 75%) is the most common product by volume globally. Premium grade ferrosilicon (e.g. high purity or low aluminium ferrosilicon) are produced in much lower volumes and used in speciality grade steels, such as electrical steels.

Steel production has been under increasing scrutiny and pressure for its carbon footprint, as it is widely agreed the industry represents around 7% of global greenhouse (GHG) emissions. The main steel-consuming sectors, automotive and construction, are key activities that will need to demonstrate the route to Net Zero by adopting higher performance, low-carbon steels, thereby reducing sector-wide emissions and optimising steel intensities in end-uses. One of the consequences is that there will be an increasing emphasis on the quality of ferrosilicon alloys used and efficiency gains they can bring as part of more comprehensive decarbonisation strategies in both sectors.

The future ‘green economy’ is also likely to benefit electrical steel, also called silicon steel, with increased demand for high-grade electrical steel to come from the EV and renewable energy sectors. EVs use approximately double the weight of electrical steel compared to conventional ICE vehicles, as it is needed in motors. Electrical steel is also needed in transformers that will be in demand to expand EV-related infrastructure such as charging stations and support more widely the growth of the renewable energy sector, which has a higher electrical steel intensity than fossil fuel-based energy.

China is the by far the main producer and consumer of ferrosilicon worldwide. It is largely self-sufficient and a net exporter of ferrosilicon. Regions like Europe (defined here as EU27 and EFTA countries) and the US are, however, net importers. As shown in Figure 1, ferrosilicon imports for Europe and the US in 2022 represented 40% and 65% of apparent consumption, respectively. Note that European producers focus, wherever possible, on premium grade ferrosilicon to get a higher value product mix, and limit, to some degree, competition with volume producers of standard grade.

To continue reading this insight, click here .

WEBINAR ON DEMAND

If you were unable to attend our informative webinar that previewed the SMU Steel Summit, you can now access the on-demand recording at your convenience.

In this engaging session, we delved into crucial topics, highlighted what to expect from this year's program and provided actionable takeaways to help your company prepare for 2024.

Take advantage of this opportunity to stay ahead in the steel industry.

Click here to watch this webinar on demand.

UPCOMING WEBINARS

It's so important for market participants to understand the implications of sustainability and decarbonisation for their industry.

This webinar will provide you with a comprehensive overview of the latest trends and developments in this area. You'll learn how sustainability and decarbonisation are impacting commodity industries, and you'll get insights into the opportunities and challenges that lie ahead.

Stay ahead of the curve and ensure your business is well-positioned for the future.?Register now .

Asian steel prices have been weighed down by bearish outlook and low confidence. Prices have reduced by $25-50 /t m/m in June. In this webinar, we will share more insights into the most recent steel price volatility in Asia.

With steel prices becoming increasingly sensitive to market rumours, access to accurate high-frequency market information become important.

Join our webinar to discover how CRU’s confidence indicators can help in providing the high-frequency information that decision-makers adopt for their operational needs.

Click here to register today.