[SMM Analysis] Structural Shortage of Australian Ore Eased

In the production of SiMn alloy, the proportion of high-grade oxide ore can be appropriately reduced, while the proportion of other types of ore can be correspondingly increased. Typically, in the northern production areas, the proportion of high-grade oxide ore used by alloy plants is about 30%, but this ratio can be reduced to around 15%. Further reduction in the proportion of oxide ore may affect the normal production of SiMn alloy. The core reason is that low-grade ore has poor blast resistance; when the furnace temperature rises, it produces powdery and small-sized ores, disrupting the structure of the smelting material layer and preventing timely gas discharge from the lower part of the furnace, posing a risk of furnace collapse. It is understood that the manganese ore blending schemes vary significantly across different production areas and manufacturers. A small number of manufacturers reduce the proportion of high-grade ore to below 15% for production. This operation can be carried out in the short term under extreme conditions but may be difficult to sustain in the medium term.

If the normal blending ratio is maintained, high-grade ore is still expected to be rapidly consumed. However, under the current circumstances, the destocking pressure of high-grade ore in Q3 will be effectively alleviated, and the destocking timeline will be significantly delayed. Nevertheless, with the increase in the proportion of low-grade ore and manganese-rich slag, the demand for low-grade ore in manganese-rich slag raw materials will increase, shifting the destocking pressure of high-grade ore to other types of ore such as those from South Africa. Overall, the inventory of manganese ore will still maintain a slight downward trend.