SunSirs: With Manganese Ore Providing a "Floor," Silicomanganese Prices May Edge Up Gradually

Price trend

Last week, the silicomanganese futures market trended bullishly. Amid significant volatility in international energy prices, domestic commodities—led by gains in coal and coke—followed suit with an upward trajectory. Silicomanganese futures maintained elevated levels, while factory quotations remained firm, making it difficult to source low-priced goods in the market. According to data from the SunSirs’ Commodity Market Analysis System, as of the end of last week, market quotations for silicomanganese (spec: FeMn68Si18) in the Ningxia region ranged from approximately 5,800 to 5,900 RMB/ton. The average market price stood at 5,850.00 RMB/ton, representing a week-on-week increase of 1.74%.

Influencing Factors

Supply Side: Last week, a few individual plants in Inner Mongolia continued their maintenance shutdowns. Two furnaces arre still expected to be fired up this month, suggesting a slight potential for alloy output to rise. Production in Ningxia remained stable; however, with some manufacturers engaging in hedging activities, inventory accumulation remains relatively severe.

In the southern region—specifically Yunnan—a few individual plants have reported receiving government subsidies and preferential electricity rates for the first quarter. Consequently, some of these facilities have gradually resumed production; however, given the rapid fluctuations in market futures, other plants remain in a cautious "wait-and-see" mode. Meanwhile, in the Guizhou and Guangxi regions, the persistent high cost of electricity—coupled with firm manganese ore quotations—makes it difficult to balance production costs, resulting in a continued low willingness to produce.

According to statistics, the operating rate of silicomanganese enterprises nationwide stood at 36.14% last week—an increase of 0.44% from the previous week—while the average daily output rose by 260 tons to reach 28,240 tons.

According to incomplete statistics, as of March 13, the total inventory held by silicomanganese enterprises nationwide stood at 375,800 tons—a month-on-month decrease of 11,500 tons. Specifically: Inner Mongolia held 62,300 tons (down 2,000 tons month-on-month); Ningxia held 294,000 tons (down 7,000 tons); Guangxi held 2,000 tons (down 500 tons); Guizhou held 2,500 tons (up 500 tons); the Shanxi, Gansu, and Shaanxi region held 9,000 tons (down 3,000 tons); and the Sichuan, Yunnan, and Chongqing region held 6,000 tons (up 1,500 tons).

Upstream Costs: Recently, the manganese ore market has received strong support from import costs, with spot prices maintaining a trend of high-level fluctuation. Geopolitical tensions have triggered a sharp surge in shipping rates and rising mining costs; consequently, spot traders were strongly inclined to hold onto their inventory to support prices, adopting a cautious stance regarding shipments. At Tianjin Port, quotes for certain semi-carbonate grades stood at 40 RMB/MTU; South African high-iron grades were quoted at 33–35 RMB/MTU; Gabonese ore was quoted at approximately 45 RMB/MTU; South32 Australian lump ore was quoted at 43.5–44 RMB/MTU; and CML Australian lump ore was quoted at 45–46 RMB/MTU.

Manganese ore prices at Qinzhou Port have trended upward amidst volatility. Rising forward costs have bolstered traders' resolve to hold firm on pricing, resulting in a slight uptick in transaction prices. However, high electricity rates in southern China have prompted manufacturers to exercise caution regarding the resumption of production; they remain in a wait-and-see mode to determine whether market prices can sustain their current strength, leaving demand for manganese ore yet to be fully unleashed. Current prices stand at 36–36.5 RMB/MTU for semi-carbonate ore, 38 RMB/MTU for Australian ore, 33 RMB/MTU for South African high-iron ore, and 39.5 RMB/MTU for South African medium-iron ore.

Regarding demand: Although the traditional peak consumption season of "Golden March" has arrived, the recovery in demand has fallen short of expectations. According to a survey of 247 steel mills, the blast furnace operating rate stood at 78.34%—an increase of 0.63 percentage points from the previous week, but a decrease of 2.24 percentage points year-on-year. The average daily output of molten iron was 2.212 million tons, down 63,900 tons week-on-week and 93,900 tons year-on-year. Influenced by factors such as the relatively slow pace of work resumption and production restarts following the Spring Festival, as well as the convening of key political meetings, demand in the construction steel market has been slow to gain momentum, exhibiting an overall trend of moderate recovery.

During the past week, the silicomanganese market was characterized by a strong wait-and-see sentiment regarding steelmakers' procurement tenders. Currently, the tender prices released thus far are largely concentrated in the range of 6,000–6,100 RMB/ton. A major steelmaker—which had not conducted any procurement in February—announced a silicomanganese purchase volume of 9,500 tons for March; this figure represents a decrease of 1,500 tons compared to its procurement volume in March of last year. The initial inquiry price was set at 6,100 RMB/ton, marking an increase of 180 RMB/ton over the January pricing of 5,920 RMB/ton.

Market Outlook

Overall, regarding the cost side, manganese ore prices—influenced by the international geopolitical landscape—are prone to rising while being resistant to decline, thereby limiting the downside potential for silicomanganese prices. On the supply and demand front, the release of newly added production capacity in the northern regions, coupled with a cautious procurement stance among downstream steel mills due to low profit margins, will cap the extent of any price appreciation. SunSirs forecasts that, in the short term, futures prices will likely continue to be driven by market sentiment within the "ferrous metals complex" and fluctuate in response to geopolitical developments. Spot prices are expected to trend gradually upward, tracking movements in both costs and futures markets; however, the market is projected to remain predominantly within a range-bound, volatile pattern.

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