China’s HBIS Raises October Manganese Alloy Tender Prices Amid Rising Steel Demand and Production Costs

HBIS

Hebei Iron and Steel (HBIS), one of China’s largest state-owned steel producers, has increased its October tender prices for manganese alloys, responding to higher steel output and rising production costs. The price hike reflects intensified demand for steel and growing costs of alloy feedstock.

HBIS’s initial October tender price for 12,000 tonnes of silico-manganese (65/17 grade) is set at 6,200 yuan per tonne (approximately $871/t) for delivery and acceptance bill payment, marking a 220 yuan/t increase from September. HBIS has also raised its purchase volume by 1,500 tonnes compared to the previous month. Industry negotiations with long-term alloy suppliers are ongoing.

Several alloy producers anticipate further price increases, projecting the silico-manganese bulk alloy price could reach 6,300 yuan/t as production costs have surged to 6,100-6,200 yuan/t due to more expensive ore feedstock.

Additionally, HBIS raised its October tender price for high-carbon ferro-manganese (65% grade) by 200 yuan/t to 5,900 yuan/t, with a purchase volume of 7,297 tonnes, up by 147 tonnes from September.

The surge in steel prices and demand—fueled by seaborne buyers—has led many mills to boost production since September, further supporting an uptrend in alloy feedstock prices. Data from the China Iron and Steel Association (CISA) show that crude steel output from member mills rose by 1.3% in late September, averaging 2.01 million tonnes per day between 21-30 September. CISA’s data encompasses over 100 of China’s largest steel mills.

Steel prices soared at the end of September, boosted by the Chinese government’s economic stimulus measures, including interest rate cuts and a lowered reserve requirement ratio for banks. China’s steel exports also climbed significantly, rising 26% year-on-year to 10.15 million tonnes in September, driven by strong overseas demand and favorable export prices.

Recent assessments show the 65/17 silico-manganese alloy grade priced higher by 200 yuan/t, reaching 5,800-5,900 yuan/t ex-works as of mid-October. Despite spot deals at these elevated prices, some alloy producers offered between 6,000-6,200 yuan/t ex-works. Meanwhile, the high-carbon ferro-manganese 65% grade held steady at 6,500-6,700 yuan/t ex-works, though many buyers were reluctant to engage in spot purchases at these levels.

China's HBIS Lowers August Manganese Alloy Tender Prices Amid Weaker Steel Demand

Chinese state-owned steel giant Hebei Iron and Steel (HBIS) has reduced its manganese alloy tender prices for August, reflecting a softening steel market and ample supply of the alloy. This price adjustment comes as the steel industry faces ongoing challenges, including reduced demand and a slowdown in construction projects.

For August deliveries, HBIS cut the tender price for 5,800 metric tons of high-carbon ferro-manganese (65% grade) to 5,800 yuan per ton ($813 per ton), a decrease of 800 yuan per ton from July. Additionally, the company launched a second round of provisional tender prices for silico-manganese (65/17 grade alloy) at 6,150 yuan per ton, slightly up by 50 yuan from the first provisional price but still down by 1,500 yuan from July.

The decision to lower prices was influenced by the abundance of spot supplies in the manganese alloy market, attributed to higher operating rates at alloy plants and diminished steel demand. Despite this, some alloy producers have maintained their prices due to rising ore feedstock costs, which have squeezed their profit margins. Many smelters reported that their production costs exceeded 6,300 yuan per ton, even after using lower-cost, non-mainstream ore feedstock imported from countries like Ghana, Myanmar, and Malaysia.

The reduction in tender prices also mirrors a broader trend in China's steel industry, where output has been cut in response to declining demand and financial losses. In July, China’s total steel output dropped by 8.7% year-on-year to 82.9 million tons, according to data from the National Bureau of Statistics (NBS). The downturn in steel production is further exacerbated by weak demand in the construction sector, which has been sluggish due to a lack of new infrastructure projects and a struggling real estate market.

Investment in China's real estate sector, which accounts for roughly 40% of the country’s steel demand, fell by 10% year-on-year from January to July, according to NBS data. This downturn is reflected in the steel purchasing managers' index (PMI), which dropped by 5.3 points from June to 42.5 in July, marking a one-year low and signaling weak activity in the steel industry.

Overall, China's crude steel output fell by 2% year-on-year to 613.7 million tons in the first seven months of the year. The top five steel-producing provinces—Hebei, Jiangsu, Shandong, Liaoning, and Shanxi—saw their combined output fall by 14% year-on-year in July, accounting for just over half of the nation's total production.