Silico-manganese futures on the Zhengzhou Commodity Exchange (ZCE) continued to trade firm on Tuesday, extending gains seen since late December as rising manganese ore costs, seasonal procurement by steel mills and supply disruptions in southern China combined to support prices.
The most-traded March silico-manganese contract settled at around RMB 5,918 per tonne, holding above the key RMB 5,900 per tonne level for the second consecutive session. The contract has gained approximately 3% since the start of December, marking a clear breakout from the prolonged consolidation seen earlier in the month.
Price Movement: Breakout From Range-Bound Phase
For much of December, ZCE silico-manganese futures remained locked in a RMB 5,700–5,800 per tonne range, mirroring weak spot prices and sustained margin pressure on alloy producers. Prices have since moved higher, reflecting a shift in market sentiment as fundamentals turned more supportive.
Market participants view the move above RMB 5,900 per tonne as significant, as prices below this level had left many Chinese producers operating at or below breakeven.
Cost Support Builds on Firmer Manganese Ore Prices
The recent strength in futures has been underpinned by elevated manganese ore prices, which have raised the cost floor for silico-manganese production.
Medium-grade manganese ore prices delivered into China have edged higher since early December, while portside prices at Tianjin have also firmed, particularly for semi-carbonate grades. Traders noted that manganese ore holders have been seeking higher prices amid relatively lower port inventories compared with the same period last year.
With ore costs remaining sticky and high-grade material supply still constrained, alloy producers have shown strong resistance to lowering silico-manganese offers, reinforcing cost-based price support.
Winter Stockpiling Drives Steel Mill Buying
Seasonal demand has also played a key role in lifting market sentiment. Steel mills, especially in northern China, are actively building winter inventories ahead of cold-weather logistics risks and the Lunar New Year holiday in February.
Several mills concluded January procurement at higher prices than December settlements, while large producers initiated tenders covering January and February deliveries. Market participants reported steady inquiries and confirmed orders over the past two weeks, as mills with relatively low alloy stocks moved to secure volumes amid rising price expectations.
Supply Tightens as Southern Producers Cut Output
On the supply side, production curbs in southern China, particularly in Guangxi, have tightened the market balance. Output has been affected by a combination of power-use restrictions, environmental inspections and negative margins for smaller producers reliant on higher-cost electricity.
Industry sources estimate that operating rates at silico-manganese furnaces in Guangxi declined sharply in December compared with early November levels. Given the region’s meaningful share of national output, these cuts have reduced available supply just as winter demand gathered momentum.
Hedging Activity Signals Producer Confidence
With futures prices stabilising above RMB 5,900 per tonne, alloy producers have increasingly turned to the futures market to hedge forward production and lock in margins. This has supported trading activity and reinforced confidence that current price levels are sustainable in the near term.
Outlook
The strengthening of ZCE silico-manganese futures reflects a shift toward cost-supported pricing rather than speculative momentum. Elevated manganese ore prices, seasonal steel mill demand and disciplined supply from southern producers suggest downside risks remain limited in the near term.
However, market participants will closely monitor steel production trends after the Lunar New Year and developments in manganese ore supply, which will determine whether the current rally can extend or transitions into a stable consolidation phase.