Ferrosilicon Market Trends

Growth Drivers

• Massive growth in the steel industry and pig iron production: Integrated mills and minimills are the two primary types of steel production in the U.S. Integrated mills produce steel raw materials like iron ore and deoxidize it using ferrosilicon, and minimills use electric arc furnaces make steel from ore-based metallics and steel scrap in the form of direct reduced iron and pig iron. Roughly 70% of steel produced in the U.S. is highly reliant on imported pig iron and made in minimills. Based on the steel specifications produced, electric arc furnaces may need to mix 20-90% metallics with the scrap steel in a furnace charge. While integrated steel mills make their own pig iron, minimills are usually reliant on merchant pig iron purchased from foreign entities.
  
  In the U.S., most of the material is purchased from Ukraine, Russia, and Brazil. In 2021, the worldwide pig iron production was 1.4 billion metric tons and China amounted to 64% of overall production and consumption. China produced 869 million metric tons (MMT) of pig iron and consumed about 871 MMT the same year. Apart from China, India, Russia, and Japan were the leading producers. In light of trade disruptions from Ukraine and Russia, Brazil, Canada, and India are estimated to supply more pig iron to the U.S. market. Furthermore, in July 2022, Stelco Holdings Inc., a Canada-based integrated steel producer reported that its one million metric tons were available for use in the U.S. market.

U.S. approximate decline in imports and unit values of pig iron from Russia, 2022 (Q1 & Q2)

• Demand from the automotive sector: In the third week of January 2025, the U.S. raw steel production reached 1,644,000 net tons and the capacity utilization was 73.8%. In 2023, of the total raw steel produced, the automotive sector accounted for 14%, preceded by construction (24%) and followed by converting end uses (8%), non-classified shipments (4%), machinery (3%), appliances (3%), and others (12%), states USGS. The growth in the automotive sector and its component manufacturing is attributed to the introduction of the 2021 Bipartisan Infrastructure Law and the 2022 Inflation Reduction Act, thereby, propelling the demand for ferrosilicon market.  

Challenges

• A gradual shift away from pig iron and scrap steel to decouple from import risks: Some steel manufacturers are keen on limiting the dependence on imports of scrap steel and limiting pig iron usage. For example, U.S. Steel announced plans to increase the annual capacity of 500,000 metric tons of pig iron at Gary, IN steel mill. This will allow its Big River Steel minimill in Osceola, Cleveland-Cliffs, AR, and Toledo, OH, to generate hot-briquetted iron, a pig iron alternative.