SunSirs: Increased Silicomanganese Supply in 2026 Will Weigh on Prices, and Cost Support May Not Be Enough to Change the Overall Weak Market Trend

According to SunSirs' commodity market analysis system: In 2025, the price of silicomanganese showed a phased trend of "unilateral decline in the first half of the year and fluctuating stabilization in the second half," with wide fluctuations throughout the year but a continuous downward trend. The average market price of silicomanganese (specification FeMN68Si18) in Ningxia at the beginning of the year was 5,904 RMB/ton, and the average price at the end of the year was 5,602 RMB/ton, representing an annual decrease of 5.12%. The highest point was on February 10th, with an average price of 6,800 RMB/ton, and the lowest point was on November 30th, with an average price of 5,434 RMB/ton.

2025 silicomanganese Market Review

At the beginning of the year, there was a temporary disruption in the supply of manganese ore, which led to a significant increase in silicomanganese futures prices. However, subsequent supply data did not show any substantial impact. Meanwhile, affected by the US-China tariff friction and the continuous decline in coal prices, prices fluctuated and fell. In June, driven by the "anti-overcapacity" policy, prices rose slightly, but supply and demand pressures persisted. After the initial enthusiasm subsided, prices gradually fell back and remained in a low range throughout the second half of the year.

Looking at it in stages:

Phase 1: Initial surge followed by a decline at the beginning of the year (January-February)

In early January, prices surged rapidly to their highest point of the year at 6,800 RMB/ton, before quickly falling back to around 6,200 RMB/ton in early February.

At the end of 2024, delays in shipments from Gabon and Australian mines caused domestic port inventories of manganese ore to fall to a five-year low, driving up raw material costs. Steel mills concentrated on replenishing their stocks at the beginning of the year, and the short-term demand surge pushed prices higher. As manganese ore arrivals gradually increased, the raw material shortage eased; crude steel production declined year-on-year, and steel mills reduced their purchases after completing their stock replenishment, causing prices to fall accordingly.

Phase 2: Continued decline (March-June)

The price continued to fall from around 6,200 RMB/ton, reaching its lowest point of the year at approximately 5,600 RMB/ton in late June, a drop of over 10%.

Production capacity in northern regions (Ningxia and Inner Mongolia) has increased. Ningxia's production increased by 9.5% year-on-year, leading to an oversupply in the industry; crude steel production decreased by 4% year-on-year, indicating weak demand in the steel industry, and the demand for ferrosilicon manganese decreased by nearly 5%. At the same time, declining coal and electricity prices (Ningxia's electricity price remained around 0.4 RMB/kWh) and falling manganese ore prices have driven down the production costs of ferrosilicon manganese. Traders in the Ningxia region have high inventory levels, making it difficult for companies to sell their products, forcing them to lower prices to reduce inventory.

Phase 3: Low-level consolidation (July-December)

The price fluctuated within a narrow range of 5,500-5,900 RMB/ton, before falling slightly at the end of the year to around 5,500 RMB/ton, resulting in a cumulative decline of approximately 7.5% for the entire year.

In the second half of the year, manganese ore prices stabilized and chemical coke prices rebounded from their lows, providing support to prices from the cost side. Production in southern regions (Guizhou and Guangxi) decreased due to high costs (Guizhou's output decreased by 24.7% year-on-year), slightly easing supply pressure; steel demand remained weak, but steel mill inventories were at historically low levels, with procurement mainly driven by essential needs, making a significant price drop unlikely. Policies aimed at curbing overcapacity and eliminating outdated production facilities briefly boosted sentiment, but did not change the overall loose supply-demand situation.

silicomanganese Market Outlook for 2026

1. Supply Side – There are still plans for new capacity additions.

Production: According to statistics, the production of ferrosilicon manganese (from 187 companies) in 2025 reached 10.1264 million tons, a year-on-year decrease of 0.22%. The main production areas in Inner Mongolia and Ningxia in northern China still dominate the industry. Production in southern China remains low due to seasonal factors and high costs.

Inventory: As of the end of December, the inventory of 63 silicomanganese manufacturers nationwide was 387,000 tons, maintaining a high level for the year. This represents a 91.11% increase compared to 202,500 tons in the same period last year. In the fourth quarter, due to the continuous weakening of market demand, manufacturers' inventories gradually accumulated rapidly, reaching their highest level of the year.

Production Capacity: In 2025, the average operating rate of sample silicomanganese enterprises was approximately 42.47%, with the operating rate generally remaining below 50%, indicating that overall production capacity was relatively abundant. As of the end of 2025, the total annual production capacity of silicomanganese nationwide reached 22.29 million tons, a year-on-year increase of 2.15%. However, despite the overall abundant capacity, there are still plans for new silicomanganese production capacity to be added in 2025 and 2026.

According to research, as of December 2025, the total planned silicomanganese production capacity nationwide was 3.0865 million tons. Of this, 223,400 tons are expected to come online by the end of 2025, and 2.8632 million tons are expected to come online in 2026. If two furnaces do not come online as scheduled by the end of 2025, then the expected production capacity in 2026 will be 2.7186 million tons, and the expected production capacity in 2027 will be 367,900 tons.

It is projected that a significant amount of new production capacity will be released in 2026, with a total of 3.08653 million tons of silicomanganese capacity expected to come online nationwide. However, if market conditions are unfavorable, the actual increase in capacity may fall short of expectations.

2. Demand side – Weak but stable conditions continue, with limited resilience.

Crude Steel: According to data from the National Bureau of Statistics, from January to November 2025, national crude steel production reached 890 million tons, a year-on-year decrease of 4%.  Specifically, crude steel production remained at a high level in the first half of the year, averaging 85.81 million tons per month; in the second half of the year, it showed a gradual downward trend, averaging 75.63 million tons per month. Overall demand for silicomanganese has entered a phase of peaking, stabilizing, and gradually declining.

In 2026, domestic demand for crude steel is expected to remain stable with slight growth, while exports will face some pressure due to policy adjustments, resulting in overall stable demand for crude steel. Downstream steel mills are experiencing poor profitability; the percentage of profitable steel mills among the 247 sample steel mills has been continuously declining since mid-August, reaching only 35.93% in mid-December, significantly lower than the same period last year. This has led steel mills to prioritize essential purchases of ferrosilicon, with no increase in bidding volume. Inventory levels have fallen to historically low levels, from 16-17 days at the beginning of the year to around 15 days at the end of the year. With limited improvement in steel mill profitability, procurement is expected to remain focused on essential needs, resulting in weak upward pressure on ferrosilicon prices.

High-end manufacturing:  Looking at specific sectors, the demand for high-quality steel from high-end manufacturing industries such as new energy vehicles will continue to grow, supporting the demand for high-grade silicomanganese alloys. However, demand from traditional construction and machinery industries is affected by the macroeconomic environment and is unlikely to improve significantly. Overall demand will remain weak but stable, making it difficult to effectively absorb the high level of supply.

Forecast: In 2026, the domestic steel market is expected to continue the pattern of weak supply and demand: crude steel production is expected to continue to decline slightly due to capacity reduction; on the demand side, although the decline in steel demand from the real estate sector is expected to narrow, it will still be a drag, overall manufacturing growth will slow down, and exports may decline.

3. Cost side – generally stable, supporting the price floor.

The production cost of silicomanganese is mainly composed of manganese ore (45%-55%), electricity (20%-30%), coke (10%-15%), and manufacturing costs. The core variables are the prices of manganese ore and coke, while electricity price policies affect regional cost differences. In 2025, the cost side is expected to show a trend of "declining in the first half and rising in the second half": In the first half of the year, due to the continuous decline in the prices of manganese ore and metallurgical coke, the immediate production cost of silicomanganese gradually decreased, and the industry as a whole was in a state of slight profitability, with high-cost regions approaching the break-even point; in the second half of the year, with the stabilization of the manganese ore market and the low-level rise in metallurgical coke prices, the cost side gradually increased, especially in the fourth quarter, where cost pressure significantly increased, and the industry's profit level declined to a state of overall industry losses.

Manganese Ore: The manganese ore market throughout the year exhibited the characteristics of "rapid supply recovery and differentiated demand structure." In the first half of the year, affected by delays in shipments from Australian mines, port inventories fell to a five-year low, and the external quotations for Gabonese lump ore and Australian ore once surged. In the second half of the year, South32's Australian mining area resumed shipments, but the low inventory situation still provided support for prices. Currently, the average weekly shipment level of Australian manganese ore has returned to pre-hurricane levels. It is expected that under normal shipment conditions throughout 2026, there will still be some increase compared to 2025, but the growth rate is expected to slow down significantly. At the same time, current national port manganese ore inventory is approximately 4.5 million tons, 1.18 million tons lower than the same period last year, which provides some support for spot manganese ore prices.

Electricity: Northern production regions benefit from lower costs due to their energy advantages, while Yunnan province benefits from lower electricity prices during the rainy season, leading to increased production. However, southern regions like Guangxi and Guizhou face significant production pressure due to higher electricity prices, with some factories completely shut down. In 2026, with the acceleration of electricity market reforms and the continued growth of renewable energy capacity, electricity prices may see a slight downward trend, but regional differences will persist, and the energy cost advantage of northern production regions will remain significant.

Coke: Under the influence of policies aimed at combating overcapacity and ensuring supply, prices are expected to remain within a range, with a relatively limited impact on the cost of silicomanganese.

Forecast: Overall cost support is expected to remain relatively strong in 2026, and the cost advantage of production areas in northern China may become even more prominent.

Market Outlook:

In 2026, with increased production capacity in the silicomanganese supply chain and a slowdown in demand growth, silicomanganese alloy prices are expected to face downward pressure. However, strong ore prices on the cost side and supportive policies such as the steel industry's stable growth plan may prevent a sharp decline in silicomanganese prices. Therefore, the silicomanganese alloy market price in 2026 is expected to continue its volatile trend.

Price Range: The expected price range for silicomanganese (Ningxia FeMn68Si18) in 2026 is 5,200-65,00 RMB/ton. The low point is expected to be similar to that of 2025, while the high point is unlikely to surpass previous highs due to supply constraints.

First half of the year: Increased supply and weak demand for steel led to generally weaker prices;

Second half of the year: If steel mills replenish their inventories and there is a short-term shortage of manganese ore, a temporary rebound in prices may occur, but the extent of the increase will be limited.

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