In 2025, the price of ferrosilicon showed a trend of being higher in the first half of the year and lower in the second half. According to the monitoring system of SunSirs, the average price of ferrosilicon (grade: FeSi75~B; particle size/mm: natural lump) in the Ningxia region was 6,026 RMB/ton at the beginning of the year and 5,285 RMB/ton at the end of the year, representing a 12.26% decrease throughout the year. The price difference for the entire year remained at approximately 740 RMB/ton. The price of ferrosilicon reached its annual high in mid-February, with an average price of 6,161 RMB/ton; while it reached its annual low in mid-June, with an average price of 5,048 RMB/ton, resulting in a price difference of approximately 1,113 RMB/ton.

2025 Market Review

In 2025, the mixed price of ferrosilicon (grade FeSi75-B, natural lumps) in Ningxia showed a "stepwise downward trend, overall weakness, and slight stabilization at the end of the year." The price fluctuated downwards from 6,024 RMB/ton at the beginning of the year to 5,285 RMB/ton at the end of the year, a cumulative decrease of 12.26%. Although there were brief fluctuations during this period, the overall trend was downward, indicating significant market pressure.

The price movement can be divided into the following four stages:

Phase 1: A small rebound at the beginning of the year followed by a rapid decline (January-March)

Price Trajectory: The price started the year at 6,024 RMB/ton, rebounded to 6,161 RMB/ton on February 10th, an increase of 2.28%, but then reversed course and fell to 5,772 RMB/ton by March 22nd, a decline of 6.33%. The initial rebound was mainly driven by pre-holiday inventory replenishment and seasonal cost support, but the momentum was limited. The rapid decline after the rebound reflects the market's pessimistic expectations for future demand, and the price has initially broken through key support levels.

Phase 2: Accelerated decline in the second quarter, with cost support failing (April-June)

Price Trajectory: From April 20th to June 10th, the price fell rapidly from 5,872 RMB/ton to 5,088 RMB/ton, a cumulative decrease of 13.34%, with the decline accelerating particularly between May 1st and June 10th. During this period, electricity prices entered a stable phase, and the price of semi-coke weakened, loosening cost support. At the same time, downstream purchasing remained weak, steel mills significantly pressured prices, and market sentiment turned pessimistic, causing the price to fall below the year's low point.

Phase 3: Low-level fluctuations and attempts to form a bottom in the third quarter (July-September)

Price trajectory: On July 20th, the price rebounded slightly to 5,221 RMB/ton, and continued to rise to 5,310 RMB/ton on August 29th, a 4.36% increase from the low point in June. However, the overall price remained volatile within a low range. After the price fell to a low level, some high-cost enterprises reduced production, slightly easing supply pressure. At the same time, the market had some expectations for the traditional peak season in September and October, leading to a technical rebound in prices, but the rebound was weak and failed to form a trend reversal.

Phase 4: Weak consolidation in the fourth quarter, followed by a slight recovery at the end of the year (October-December)

Price Trend: On October 8th, the price fell to 5,241 RMB/ton, and further declined to 5,192 RMB/ton on November 17th, reaching the second lowest point of the year. On December 31st, the price slightly rebounded to 5,285 RMB/ton, a modest increase of 1.79% compared to the November low. Towards the end of the year, the price stabilized due to expectations of higher winter electricity prices and environmental protection-related production restrictions. However, demand did not improve significantly, and market sentiment remained cautious, resulting in a limited price recovery and an overall weak consolidation pattern.

Silicon Ferroalloy Market Outlook for 2026

Cost Factors: The interplay and correlation between electricity prices and semi-coke prices

Electricity price: Electricity costs still account for over 50% of the cost of ferrosilicon production. As the proportion of market-based electricity trading increases, the correlation between ferrosilicon companies' electricity prices and coal prices, renewable energy output, and grid load will become stronger. Companies with their own power plants, renewable energy facilities (such as integrated source-grid-load-storage projects), or located in regions with low electricity prices (such as some industrial parks in Xinjiang and Inner Mongolia) will gain significant cost advantages and stability. The proportion of green electricity consumption and carbon emission costs may gradually be taken into account, having a long-term and profound impact on the cost structure of energy-intensive products like ferrosilicon.

The overall electricity price is expected to increase by 3-8% compared to the average level in 2025, and the price difference between peak and off-peak hours may widen further.

Semi-coke: Semi-coke prices will continue to be anchored to the thermal coal and chemical coal markets. Under the policy of ensuring coal supply and stabilizing prices, the main operating range for semi-coke prices is expected to be 950-1,200 RMB/ton. The ongoing elimination of outdated production capacity and the large-scale, integrated upgrading of the semi-coke industry will continue, potentially affecting short-term supply elasticity. Besides ferrosilicon, changes in demand for semi-coke in chemical, metallurgical, and other fields will also influence its price.

Overall, the impact of semi-coke on ferrosilicon costs may be weaker than in 2024-2025, but its fluctuations will still be an important factor affecting the short-term profits of ferrosilicon companies.

Capacity and Production: Adjustment and Optimization in a Context of Overcapacity

According to 2025 data, Inner Mongolia (1.8247 million tons) and Ningxia (1.3336 million tons) are the absolute main production areas, accounting for nearly 60% of the total. Qinghai, Shaanxi, Gansu, and other regions serve as regional supplements, leveraging advantages in electricity prices or resources. Overall production capacity remains in a state of oversupply. In 2026, the ferrosilicon industry will enter a period of profound structural adjustment under the constraints of the "dual carbon" goals.

In terms of production capacity, the purely new capacity is expected to be less than 200,000 tons, with supply pressure mainly coming from existing capacity that has been built but not yet fully utilized. Energy consumption, environmental protection, and safety regulations are becoming increasingly stringent, and outdated facilities with power consumption exceeding 8050 kilowatt-hours per ton face pressure to be phased out. Overall effective capacity is expected to remain stable or slightly decrease. Production capacity will further concentrate in resource- and energy-rich regions such as Inner Mongolia and Ningxia.

In terms of production, the estimated annual output is between 5.8 and 6.1 million tons, representing a slight increase of 0-3% year-on-year. Supply will be characterized by a dual regulatory mechanism driven by "profit and policy": prices falling below cash costs will trigger production cuts, while phased production restrictions in major producing areas will lead to seasonal fluctuations in output, exacerbating market supply uncertainty.

Demand Section - Structural Opportunities and Total Supply Constraints Coexist.

Total volume constraints: Under the national strategy of continuously promoting industrial structure adjustment and the "dual carbon" goals, crude steel production is expected to continue following the path of "total volume control and structural optimization." This means that the total demand for ferrosilicon in the steel industry has a clear ceiling and is unlikely to experience significant growth.

Structural opportunities:

Special steels and stainless steel: The development of high-end manufacturing, new energy equipment (wind power, nuclear power), and aerospace industries will drive the demand for special steel materials, correspondingly increasing the demand for high-purity ferrosilicon with low aluminum and low titanium content. This is the main direction of demand upgrading.

Metallic magnesium: As the second largest consumer of ferrosilicon, metallic magnesium has promising application prospects in areas such as automotive lightweighting and 3C products.  Demand for ferrosilicon is expected to maintain a stable annual growth rate of 3-5%.

Policy support: Large-scale equipment upgrades and trade-in programs for consumer goods are expected to boost steel demand in the manufacturing sector, indirectly supporting ferrosilicon consumption.

HBIS Bidding: The Evolution of its Bellwether Role

In 2025, the bidding price for Hegang's ferrosilicon showed a systematic downward trend, with an average annual price of approximately 5,826 RMB/ton, a 14% decrease compared to 2024. The price continuously declined from 6,570 RMB/ton at the beginning of the year, reaching a low of 5,400 RMB/ton in July. Although there was a slight rebound after August, the price remained volatile within the 5,600-5,700 RMB/ton range, reflecting a loose supply and demand situation and a lack of market confidence. Compared to 2024, the 2025 bidding price was generally lower than the same period, and the price fluctuation range narrowed, with a price difference of only 1,170 RMB/ton, indicating a lack of strong market drivers and a strong wait-and-see attitude. In 2026, Hegang's bidding will still be a core pricing reference, and its price will more sensitively reflect cost changes, steel mill profits, and inventory levels. The correlation between the bidding price and the spot price is expected to further strengthen, the price difference will continue to narrow, and pricing efficiency will improve. At the same time, structural changes such as whether the bidding model shifts towards long-term contracts and whether the procurement of high-purity ferrosilicon increases will affect the market supply rhythm and price fluctuation characteristics.

Exports: A difficult recovery and a gradually changing landscape.

The slowdown in global economic growth is suppressing demand for basic raw materials. Increased domestic production in countries like Russia and Malaysia is intensifying competition with Chinese products in the international market. Furthermore, the EU's Carbon Border Adjustment Mechanism (CBAM) has entered its formal operational phase, posing a long-term challenge to the cost competitiveness of Chinese ferrosilicon exports. Exports are projected to reach 580,000-650,000 tons in 2026, potentially representing a 5-10% recovery compared to 2025, but unlikely to return to the high levels seen before 2022.

Overall Outlook: Seeking a new equilibrium amidst volatility.

In 2026, the ferrosilicon market will operate in a new environment characterized by "high costs, high volatility, and strong constraints":

Price Trend: It is expected that the main operating range for 72# ferrosilicon spot prices throughout the year will be 6,800-8,000 RMB/ton. The bottom will be determined by the cash cost of high-cost production capacity (approximately 6,700-6,900 RMB/ton), while the top will be constrained by the pressure from excess capacity and the acceptance level of downstream industries.

Operating rhythm:

First half of the year: Potential for downward pressure. Following the Spring Festival, there will be a period of weak demand, coupled with the end of winter production restrictions and the resumption of supply, leading to downward pressure on prices.

Second half of the year: There are many variables. If macroeconomic policies to stabilize growth are implemented effectively, coupled with the peak summer electricity demand and potential energy consumption controls, prices have the potential to rebound. The trend at the end of the year will depend on the specific implementation of crude steel production controls throughout the year and the intensity of environmental protection-related production restrictions during the winter.

Industry Profitability: The industry as a whole will struggle to achieve substantial profits, and low profits and periodic losses will become the norm. Company competitiveness will increasingly depend on cost control capabilities (access to electricity resources), product structure (proportion of high-value-added products), and financial and risk management skills.

Close attention should be paid to the intensity and pace of macroeconomic policies, the suddenness and severity of energy consumption and environmental protection policies in major production areas, the speed of power market reform, and the recession risks and trade policy changes in major overseas economies. These factors could all disrupt market expectations and trigger unexpected price fluctuations.

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