[SMM Analysis] SiMn alloy production rebounded MoM in July, driven by both costs and market confidence, and may continue to rise in August

         In July 2025, the total production of SiMn alloy in China saw a significant increase, rising slightly MoM but declining YoY. In terms of regional production changes, Inner Mongolia and Ningxia regions experienced notable growth rates, while Guangxi, Guizhou, Yunnan, and other regions maintained relatively stable production schedules, with a slight increase MoM.

         The main reasons for the MoM increase in production in July were as follows: Firstly, Inner Mongolia leveraged its stable cost advantages, maintaining a high operating rate and increasing production. Ningxia region saw a decrease in electricity costs in July, effectively controlling production costs and subsequently increasing production. Southern regions like Yunnan benefited from preferential electricity policies during the rainy season, reducing production costs and achieving stable growth in SiMn production. Secondly, the overall performance of the SiMn futures market in July was moderate, with the latter half of the month showing fluctuations at highs. Both futures and spot prices explored upward movements, gradually repairing the profits of SiMn alloy plants. The market sentiment warmed up, boosting the production enthusiasm of factories. Additionally, HBIS Group set the SiMn price at 5,850 yuan/mt in July, higher than expected, driving market sentiment for SiMn and prompting an increase in SiMn production.

          Looking ahead to August 2025, the production of SiMn alloy is expected to continue rising slightly. On the one hand, the support from cost advantages remains, with Inner Mongolia and Ningxia continuing to enjoy cost advantages, and regions like Yunnan still in the preferential electricity period during the rainy season. Most factories have indicated no intention to cut production. On the other hand, the driving force of market confidence is significant. Influenced by the positive performance of the SiMn futures market in July, factories in both the north and south have plans to slightly increase production. Additionally, stimulated by macro tailwinds such as the national anti-"rat race" competition policies, the downstream stainless steel market has strengthened, with market activity gradually recovering. Expectations for production cuts have weakened, and market demand for SiMn alloy is expected to increase.