Chinese silico-manganese (SiMn) alloy prices are expected to face downward pressure in 2025, as unpromising steel outlooks may outpace potential further output curbs at most Chinese alloy smelters.
Argus-assessed prices for 65/17-grade alloy fell to 6,000-6,150 yuan/t ($822-842/t) ex-works on 19 December, down from Yn8,200-8,500/t ex-works on 30 May, when prices rose to a multi-year high after Australia-based South32's output suspension at its Gemco mine sharply lifted manganese ore feedstock prices.
A sustained decline in steel demand and mounting inventories at many alloy plants forced alloy spot prices downwards from June onwards, although more suppliers started to hold offers firm in the past few weeks on the back of higher ore costs and restocking purchases from steel mills before the end of this year.
Slowing steel demand
China's crude steel output in January-November fell by 2.7pc from a year earlier to 929.19mn t, according to data from China's National Bureau of Statistics. Steel production in November fell by 4.3pc from 81.88mn t in October. China's crude steel output is expected to have inched down further in December, as more domestic mills will conduct annual equipment maintenance before the end of this year, according to market participants.
The output decline was attributed primarily to the weakening domestic real-estate sector, a major consumer of crude steel, in which investment from January-November fell by 10pc on the year. Domestic steel consumption has shown no signs of picking up, with regional steel prices having fallen in November. Shanghai's mainstream hot-rolled coil ex-warehouse prices assessed by Argus fell to Yn3,470/t on 29 November, down by Yn50 from 30 October.
China's real-estate industry is still facing challenges, although the government has introduced fiscal policies that support the slowing construction sector. There remains the likelihood of a decline in sales and housing prices in 2025, according to market participants, given the current scale of unfinished projects and unsold house inventories.
Reduced alloy output
Lower steel demand during the economic slowdown and a squeeze in profit margins at most alloy plants caused by higher ore feedstock costs and lower bid prices caused Chinese Simn production to fall this year. Domestic output of the alloy is unlikely to recover in 2025 because of unprofitable margins and shrinking steel consumption.
China's production of the bulk alloy is estimated to have fallen to about 10.45mn t this year, down from about 11.8mn t in 2023 and 9.85mn t in 2022, some market participants told Argus. More alloy plants in China's Inner Mongolia and Ningxia province were forced to cut or suspend operations in the first half of this year, particularly over March-May, when China's output fell by nearly 20pc on the year to about 2.34mn t. Inner Mongolia and Ningxia are China's key producing hubs for SiMn, accounting for 60-70pc of China's total production.
Reduced alloy demand, falling alloy prices and lower shipments from South32 weighed on China's imports of manganese ore feedstock from main suppliers. China's manganese ore imports declined by 7.8pc on the year to 26.79mn t in January-November, customs data show. The average import price was $152/t for January-November, down by 3.7pc on the year.
China's ore imports from Australia decreased by 55pc on the year to 2.11mn t in January-November, while China imported more ores from South Africa and Ghana to make up for the loss. Argus expects China's ore imports to rise next year as South32 restarted mining activity at its Gemco unit in June and is considering resuming exports next year.
