In December 2024, the ferromanganese-silicon industry faced ongoing resumption of production coupled with relatively weak downstream demand, resulting in fluctuating and generally weaker price trends on the futures market. As we entered January 2025, amid continuously deepening losses in production profits, ferromanganese-silicon output is expected to decline slightly month-on-month. Overall supply levels are forecast to remain at a moderately high level, leaving the market in a state where supply slightly exceeds demand.

In December 2024, the cost center for ferromanganese silicon remained stable, with limited fluctuations. In the Inner Mongolia production area, costs ranged from 5,948 to 5,999 yuan per ton, while in the Ningxia production area, costs ranged from 6,112 to 6,250 yuan per ton. Looking at individual components, in December 2024, electricity prices in the Inner Mongolia region rose by 0.0025 yuan per kilowatt-hour, whereas in the Ningxia region, they fell by 0.02 yuan per kilowatt-hour; in the southern production areas, electricity prices remained unchanged month-on-month. Regarding manganese ore, Jupiter Company had previously announced a suspension of shipments to China starting in November 2024, and UMK Company also adjusted its manganese ore transportation strategy by halting road transport altogether, resulting in a combined decline in the volume of manganese ore arriving in Chinese ports. At the same time, downstream restocking efforts were relatively favorable, causing manganese ore port inventories to decline from 6.09 million tons to 5.20 million tons, and prices of various types of manganese ore stabilized after initially falling. As for chemical coke, the ex-factory price in Ningxia stood at 1,450 yuan per ton, remaining unchanged month-on-month. With the gradual reduction in Ningxia’s settlement electricity prices, the cost gap between the two major production regions has narrowed, thereby weakening Inner Mongolia’s previous cost advantage.

It is expected that the central cost of manganese silicon in January will remain stable month-on-month and will be unlikely to collapse significantly. First, regarding manganese ore, after the New Year’s Day holiday, manganese silicon plants will begin their final stock-up preparations ahead of the Spring Festival. Currently, port inventories are declining, and the circulation volume of various traded ores has decreased, which may provide phased support for manganese ore prices. If downstream restocking volumes exceed expectations, a slight increase in manganese ore prices cannot be ruled out. Second, there is a possibility that the price of metallurgical coke could fall by 50 yuan, which would reduce the production cost of manganese silicon by approximately 28 yuan per ton. Finally, electricity prices represent an important variable, and their final settlement situation warrants close attention. Overall, the central cost of manganese silicon production will be influenced by multiple factors, including fluctuations in manganese ore prices, metallurgical coke prices, and electricity costs. The degree of flexibility in these costs will depend on the intensity of manganese ore restocking from New Year’s Day through the period before the Spring Festival.

The weak real demand during the off-season has been the dominant factor shaping the price performance of ferromanganese silicon in December 2024. During this period, ferromanganese silicon supply reached 880,000 tons, an increase of 7% month-on-month. Several newly commissioned furnaces at northern plants have already begun producing iron normally, while major southern plants have maintained stable production levels to fulfill long-term contracted orders. Excluding off-balance-sheet demand, the demand for ferromanganese silicon during the same period was approximately 830,000 tons, up 2% month-on-month, and inventories have shown a cumulative upward trend.

Currently, the profit margin for manganese silicon production in the Ningxia region is experiencing a loss of approximately 300 yuan per ton. Factories in southern production regions are also facing deepening losses, and their output is expected to decline slightly to around 860,000 tons. On the demand side, steel inventory levels remain relatively low, and profit margins per ton of steel vary across different product types, ranging from -50 to 200 yuan per ton. Downstream steel mills show limited willingness to cut production. Despite this, manganese silicon consumption has proven relatively resilient; estimated demand for the same period is 830,000 tons, unchanged from the previous month. Overall, as manganese silicon production cuts take effect, the degree of supply surplus is expected to ease somewhat. In addition, it’s important to pay attention to potential improvements that could arise from deliveries under off-balance-sheet demand.

In summary, the primary reason for the volatile downward trend in manganese silicon prices in December 2024 lies in the relatively weak underlying fundamentals. In January 2025, while the fundamentals of manganese silicon are expected to remain weak, there may be marginal improvements, and market prices could exhibit a pattern characterized by cost-based support below and supply-demand pressures capping the upside.