China: Silico manganese prices to stay under pressure in H2

• • Rising SiMn supply, inventories weigh on market sentiment

• • Weak steel demand pressures prices; costs offer support

China’s silico manganese (SiMn) market is expected to stay under pressure in the second half of this year, according to Mysteel’s latest semi-annual report on the commodity, pointing to mounting inventories of the ferroalloy and the commissioning of new smelting furnaces that will lift supply.

SiMn output is expected to increase in coming months as many smelters in Southwest China’s Yunnan are likely to resume operation during the wet season that spans May to October. The decline in their input costs that southern smelters can enjoy from consuming hydroelectricity can bring a reduction of Yuan 500-600/tonne ($74-88/t) in their SiMn smelting costs, the report explained.

In parallel, new SiMn capacity in northern China is scheduled for commissioning during the current half year, as local smelters can tap into competitively-priced electricity generated from wind and solar power projects expanding in the region, according to the report.

For full year 2026, although about 2.78 million tonnes/year of new SiMn capacity is expected to become operative, specific commissioning timelines for some 2.16 million t/y of that total remain pending, the report pointed out.

During the January-June half of this year, SiMn production among the 187 Chinese smelters under Mysteel’s regular tracking totaled 4.81 million tonnes, falling by 1.7% on year. This was mainly due to production cuts among smelters in northern China during the April-June quarter to protect their profit margins. The sampled smelters host 99% of China’s SiMn smelting capacity.

In the H1 production total, Inner Mongolia’s production share rose slightly by 0.8% from January-June last year to 2.6 million tonnes. This brought its share of national production to 54%, up from 51.2% in full-year 2025, Mysteel Global noted.

Significantly, the report observes that growth in domestic SiMn output this half is expected to be limited, as the restart schedule of smelters in southern China and the commissioning speed of new capacity in northern China may be held back by the persisting weakness of SiMn prices.

Domestic demand is expected to remain sluggish during the current July-September quarter. Steel mills are seen continuing to keep their SiMn inventories low to mitigate risks, as they anticipate needing to contend with weak steel demand from end-users and soft finished steel prices.

The steelmakers are likely to cut their procurement prices to reduce their production costs and improve their profit margins, putting more pressure on SiMn prices, the report argues.

After rebounding in the first quarter on the back of cost support, SiMn prices lost ground during the April-June quarter, weighed down by lower purchase prices offered by domestic steel mills and high SiMn inventories held by Chinese smelters, Mysteel Global learned.

At the end of June, Mysteel assessed the national price of 6517 SiMn at Yuan 5,613/t including the 13% VAT, sliding by Yuan 656/t from the recent high on March 31, or down Yuan 39/t compared with the end of last December.

China’s manganese ore prices also retreated in the second quarter, with the price of South Africa-origin 36.5% grade Mn ore at North China’s Tianjin port under Mysteel’s assessment sitting at Yuan 36.8/dmtu including the 13% VAT as of June 30. This represented a significant fall from the recent high of Yuan 44/dmtu on March 31, even though it was still Yuan 1.8/dmtu higher compared with the end of 2025.

SiMn inventories held by Chinese smelters hovered high during the first half year, suggesting oversupply. Mysteel’s survey showed that as of June 25, the total tonnage of SiMn stocked by the 63 SiMn smelters under its tracking reached 372,700 tonnes, still a high level though it had slipped by 13,300 from the end of 2025. These smelters represent about 80% of China’s total SiMn smelting capacity.

Nonetheless, China’s manganese ore prices are expected to remain relatively resilient this half on the back of domestic traders’ elevated import costs, and coke prices have already logged several consecutive price hikes. These cost-side factors are likely to underpin SiMn prices and limit their downside, according to the report.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.