Silicon Manganese Market Seeks New Equilibrium Amid Cost-Demand Tug Of War

The primary market contradiction lies between strong cost support and tepid consumption.

• Firm Cost Backstop from Manganese Ore: The manganese ore market remains robust, forming the most substantial cost foundation for silicon manganese. Recent port data shows high-grade Gabon block ore at Tianjin port quoted between 43.5-44 yuan/ton-degree, with Australian blocks at 41-44 yuan/ton-degree. Tight port inventories for high-grade lump ore have bolstered trader confidence, creating a prevailing reluctance to sell at low prices and an upward bias in ore costs.

• Seasonal Demand Weakness: As winter sets in, construction activity slows, leading the steel sector into its traditional demand off-season. Although recent silicon manganese tenders from some steel mills showed slightly higher prices, major mills have largely completed their restocking for the current phase, with subsequent procurement expected to slow. The broader steel market context of high supply and softening demand continues to limit mills' enthusiasm and price acceptance for raw materials like silicon manganese.

Beyond the core cost-demand dynamic, other factors contribute to the market's sideways movement.

• Persistent Supply Pressure: Although production cuts are anticipated in some regions due to electricity costs or maintenance, overall national silicon manganese output remains at relatively high levels. Stable production in northern key producing areas, coupled with potential new capacity coming online, may offset reductions elsewhere, making a fundamental shift from the current oversupply unlikely in the short term.

• Policy and Macro Influences: The ongoing "anti-internal competition" policy is expected to foster long-term industry consolidation by phasing out outdated capacity. Furthermore, the national "15th Five-Year Plan" emphasizes green and high-quality development, signaling rising environmental compliance costs and industrial upgrading as enduring trends for the sector.

In the near term, the silicon manganese market is likely to remain range-bound. High costs provide a strong floor against significant price drops, while elevated inventories and weak demand suppress the ceiling for rebounds. A decisive breakout from the current impasse may require clearer signals of demand recovery or unexpected supply contractions.

For downstream consumers and traders, a prudent strategy in this volatile environment includes:

1. Monitoring the Cost Floor: Closely tracking manganese ore price trends as a key indicator for identifying the market's bottom range.
2. Flexible Inventory Management: Avoiding building excessive inventory during the demand lull, opting instead for a "purchase-as-needed" approach with smaller, more frequent orders.
3. Exploiting Regional Differentials: Paying attention to potential procurement opportunities arising from cost-based price disparities between northern and southern production regions.