In recent developments within the ferroalloy sector, spot prices for silicon manganese and ferrosilicon have held steady. South32’s second-quarter report indicates that mine shipments, affected previously, will not resume until the first quarter of 2025. Despite market speculation easing regarding manganese ore supply constraints, focus has shifted towards the substitution dynamics between high and low-quality manganese ores. Concurrently, production levels for silicon manganese and ferrosilicon are showing signs of recovery.
However, following a recent sharp decline, silicomanganese finds itself in a state of overall loss, while ferrosilicon profits have significantly narrowed. Anticipation persists for heightened energy efficiency and carbon reduction measures in the latter half of the year, with early indicators showing a slight rebound in thermal coal prices, emphasizing the need for cost management.
Given that electricity constitutes a substantial portion of ferrosilicon production costs, the pricing disparity between silicon manganese and ferrosilicon may narrow further. Analysts at Jianxin Futures suggest that silicomanganese prices could weaken once more following a brief resurgence, citing persistent weaknesses in market fundamentals.
Shenyin Wanguo Futures echoes caution, particularly regarding the potential upside for double silicon prices. Manganese ore traders are bolstering price levels in the short term, yet the underlying fundamentals for silicomanganese remain tepid. The cost environment remains challenging, with northern ferrosilicon costs hovering around 7,175 yuan/ton and industry profitability strained. In contrast, ferrosilicon costs average around 6,250 yuan/ton, offering some respite.
Demand from terminal steel consumers has softened as steel mill profits dwindle and finished product output edges lower. Meanwhile, supply remains ample, with elevated levels of ferrosilicon and silicomanganese output contributing to a loosening market dynamic and increased inventory pressures. With downstream demand waning and supply-demand dynamics shifting, caution is advised regarding potential price increases for double silicon. Monitoring production controls among double silicon manufacturers and Australian manganese ore shipments will be crucial in navigating market uncertainties.
In conclusion, the ferrosilicon and silicomanganese sectors face ongoing challenges amid fluctuating prices and evolving supply dynamics, highlighting the need for vigilant market monitoring and strategic decision-making among industry stakeholders.
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