Ferrosilicon Procurement Cost Accounting: Impact Prediction of Raw Material Price Fluctuations on Procurement Prices

Ferrosilicon is a core raw material for industries such as steel, casting, and chemicals. Its procurement cost directly impacts the production costs and profit margins of downstream enterprises. The core components of ferro silicon procurement costs include raw material costs, energy costs, processing costs, and logistics costs. Among these, fluctuations in raw material prices (especially silica and coke) are a key factor leading to significant fluctuations in ferrosilicon procurement prices.

The production process of ferrosilicon alloy (taking the mainstream ferrosilicon 75 as an example) uses silica and coke as core raw materials, smelted at high temperatures in an electric arc furnace. Its procurement cost accounting needs to cover the entire chain from raw materials to production to distribution. The cost proportion of each link fluctuates slightly with market changes, but the core structure remains relatively stable.

1. Core Cost Composition and Percentage (Industry Average in 2025)

- Raw Material Costs (65%-70%):

Includes silica (30%-35% of raw material costs), coke (55%-60% of raw material costs), and steel scrap (5%-10% of raw material costs). This is the "ballast" of ferro silicon alloy costs, directly determining the basic purchase price.

- Energy Costs (15%-20%):

Ferrosilicon smelting is a high-energy-consuming industry. Each ton of 75# ferrosilicon requires 8000-8500 kWh of electricity. Fluctuations in electricity prices (especially industrial electricity prices) directly affect costs, and this cost is second only to raw materials.

- Processing and Other Costs (10%-15%):

Includes equipment depreciation, labor costs, environmental protection costs (desulfurization and denitrification, solid waste treatment), and logistics costs (from the production area to the buyer's warehouse). Among these, environmental protection costs have increased from 2% to 5% in recent years, becoming a significant cost item.

2. Basic Calculation Formula

FeSi alloy Purchase Price (RMB/ton) = (Silica Unit Price × Unit Consumption + Coke Unit Price × Unit Consumption + Steel Scrap Unit Price × Unit Consumption) + (Unit Energy Consumption × Electricity Price) + Processing and Other Costs + Supplier Profit

Key Unit Consumption Reference (75# Ferrosilicon): Silica 2.2-2.5 tons/ton ferrosilicon, Coke 0.8-1.0 tons/ton ferrosilicon, Steel Scrap 0.1-0.15 tons/ton ferrosilicon.

The core raw materials for ferrosilicon are silica (providing silicon) and coke (providing heat source and reducing agent). Their prices are affected by supply and demand, policy regulation, and supply chain transmission, with fluctuations reaching 10%-30%, directly impacting the ferrosilicon purchase price.

1. Silica: Mild Fluctuations but Impact on Base Costs

Silica is the "basic raw material" for ferrosilicon production, requiring a SiO₂ content ≥97% and impurities (Al₂O₃, Fe₂O₃) ≤1.5%.

- Causes of Fluctuations:

① Supply and Demand: Downstream ferrosilicon capacity operating rate (a 10% increase in operating rate leads to an 8%-12% increase in silica demand), and silica mining policies (environmental protection restrictions and mine safety inspections will temporarily reduce supply);

② Transportation Costs: Silica has a high density (2.6g/cm³), and its transportation radius is typically no more than 500 kilometers. Fluctuations in logistics costs from production areas to smelters (such as rising diesel prices) will affect the delivered price.

2. Coke: Volatile and a Key Driver of Ferrosilicon Cost Fluctuations

Coke (made from prime coking coal) is the core energy source for ferrosilicon smelting. Its combustion provides the high temperatures (above 1300℃) required for smelting, and it also acts as a reducing agent to reduce SiO₂ in silica to elemental silicon, accounting for over 60% of raw material costs.

- Causes of Fluctuations:

① Upstream Transmission:

Fluctuations in prime coking coal prices (affected by international coking coal import policies and domestic coking coal capacity control);

② Supply and Demand:

Combined demand from the steel industry (steel uses coke accounts for 70% of total coke demand, and fluctuations in steel operating rates directly impact coke supply and demand), and demand from ferrosilicon and other coal chemical industries;

③ Policy Control:

Environmental protection-related production restrictions and capacity optimization under the "dual-carbon" policy.

3. Other Raw Materials: Relatively Minor Impact but Requires Attention

Steel scrap (used to adjust the iron content in ferrosilicon) prices are linked to the scrap steel market, fluctuating by 3000-4000 yuan/ton. Due to low consumption (0.12 tons/ton of ferrosilicon), its impact on the purchase price is only 0.5%-1%. Electrode paste (electrode material for submerged arc furnaces) price fluctuations have an impact of approximately 1%-2% on costs and can be used as a secondary indicator.

Purchasing parties need to establish a dynamic prediction model combining historical data, real-time indicators, and policy forecasts to proactively control the risk of purchase price fluctuations. The following are three practical prediction methods:

1. Single-Factor Sensitivity Analysis: Quantifying the Impact of Single Raw Material Fluctuations

Core Logic: Keeping other cost items constant, only changing the price of a single raw material, and calculating the magnitude of the change in the ferrosilicon purchase price. Suitable for quickly determining the impact of a single raw material price increase/decrease on costs.

2. Predicting the Lag in the Supply Chain Transmission: Grasping the Pace of Price Changes

Core Logic: Raw material price fluctuations are transmitted to ferrosilicon through the supply chain, with a lag of 1-2 months. The trend of ferrosilicon procurement prices can be predicted by tracking changes in upstream raw material prices (such as coking coal).

3. Policy and Supply-Demand Overlap Prediction: Coping with Extreme Price Fluctuations

Core Logic: In extreme situations (such as environmental production restrictions or adjustments to import policies), raw material prices may experience irrational fluctuations. A comprehensive prediction based on policy guidance and the supply-demand pattern is necessary.

Based on the patterns and predictions of raw material price fluctuations, purchasers can optimize costs and reduce price fluctuation risks through the following strategies:

1. Long-Term Agreements to Lock in Prices: Stabilizing Basic Procurement Costs

Sign long-term procurement agreements of 3-6 months with core ferrosilicon suppliers, stipulating a "base price + raw material fluctuation linkage clause": When the prices of coke and silica fluctuate by more than ±5%, the procurement price will be adjusted according to the agreed formula. This protects supplier profits while preventing the purchaser from bearing the costs of extreme fluctuations.

2. Multi-channel Procurement and Dynamic Inventory Adjustment

① Expand supplier channels:

Avoid supply shortages and price increases caused by policy-driven production restrictions in a single production area;

② Dynamically adjust inventory:

When raw material prices are anticipated to rise, appropriately increase safety stock (it is recommended to maintain a 15-30 day supply); when prices are anticipated to fall, reduce inventory to avoid tying up capital.

3. Focus on Alternative Raw Materials and Process Upgrades

For industries such as casting and chemicals, which do not have extremely high requirements for ferrosilicon purity, alternative raw materials such as ferrosilicon manganese alloy can be used within the limits of technology (in some scenarios, it can replace 30% of ferrosilicon) to reduce dependence on ferrosilicon price fluctuations; at the same time, encourage suppliers to adopt processes such as waste heat recovery and high-efficiency submerged arc furnaces to reduce energy costs and indirectly stabilize procurement prices.