SMM Analysis: Despite Seasonal Demand Recovery, Softening Costs & Loose Supply Make Sharp EMM Price Gains Unlikely in H2

The spot price of domestic electrolytic manganese showed a clear staged trend in the first half of 2026: it first surged upward, retreated amid intensified long-short game, and then rebounded and stabilized supported by coordinated production cuts. The price center remained elevated throughout the period, underpinned mainly by high sulfuric acid costs and joint industry regulation.

1. Price Review: Driven Higher by Costs Early Year, Corrected by Supply-Demand Tensions, Stabilized via Production Cuts

Multiple bullish factors pushed electrolytic manganese prices up at the start of the year. High sulfuric acid prices and stricter energy consumption controls lifted overall smelting costs, discouraging manufacturers from selling at steep discounts. Major producers held ample long-term orders with steady shipment schedules and low inventory, giving them strong motivation to prop up prices. Driven by these factors, spot prices peaked at 18,500 yuan/ton in H1.

After hitting highs, market conflicts intensified and prices edged down. Sustained high raw material costs burdened downstream steel mills, which actively pressed for lower purchase prices. Spot trading cooled off, and sellers offered discounts for bulk retail orders. As the off-season dragged on, the industry alliance rolled out unified production cuts and price support measures, with small and medium smelters slashing operating rates to reduce market supply. Prices recovered slightly, and mainstream spot transactions settled within 17,800–18,000 yuan/ton by end-June.

2. Supply-Demand Fundamentals: Demand Restrained by Substitution; Targeted Output Cuts Ease Oversupply

The market stayed in surplus throughout H1 with limited sustained demand growth. Faced with expensive electrolytic manganese, stainless steel mills raised the proportion of manganese alloy as a cheaper substitute, dragging down overall demand.

To counter weak seasonal demand and destock inventories, the industry launched production reduction campaigns starting May, mostly among less competitive small-medium producers. Integrated large plants maintained stable output thanks to sufficient long-term orders. Controlled supply effectively relieved inventory accumulation and prevented a prolonged price slump.

3. Core Price Supports: High Acid Costs and Mature Industry Coordination

Persistent high sulfuric acid prices formed a rigid cost floor, leaving little room for manufacturers to cut prices sharply despite downstream bargaining pressure.

Moreover, the well-established industry alliance mechanism stabilized market sentiment. When downward price risks emerged, participants quickly agreed on synchronized production curbs to shrink circulating supply, smoothing short-term volatility and avoiding steep price crashes.

4. H2 2026 Outlook: Seasonal Demand to Lift Prices, Upside Capped by Multiple Headwinds

On the demand side, existing long-term orders will sustain steady purchases. Q3 marks the traditional stocking season for stainless steel and lithium battery raw materials, bringing periodic buying spikes. On the supply side, the industry alliance is expected to enforce deeper production cuts, tightening spot supply and offering price support.

Nevertheless, drastic price rallies are unlikely amid lingering loose supply-demand balance. China boasts a large effective production capacity base; temporary output cuts cannot sustain long-term supply shortages. In addition, manganese ore and sulfuric acid prices are projected to ease later this year, weakening cost-side support. Overall, electrolytic manganese prices will fluctuate with mild upward momentum in H2, with the full-year price center above that of H1, without a one-sided sharp rally.