[SMM Analysis] ost–Sentiment Tug-of-War: MnSi Output First Falls Then Recovers—Can September Deliver a Trend Reversal?

Since August, constrained by multiple factors including industry-wide losses, diverging production costs, and the off-season demand lull, China's national manganese silicon (MnSi) output has exhibited a pattern of "intensifying regional divergence and an overall dip-then-rise trajectory." Looking at the actual production dynamics across major producing regions, manufacturers have adopted differentiated scheduling strategies based on their own cost structures, order books, and policy expectations.

Inner Mongolia: Long-term Contracts Provide a Backstop, Production Remains Rock-Solid

As the area with the highest concentration of MnSi capacity in China, the Inner Mongolia production region continued its "long-term contracts as the mainstay, spot orders as a supplement" business model through July and August. Local leading producers have signed long-term supply agreements with core steel mills; contract volumes essentially cover the normal operating needs of most furnaces, leaving very limited volumes for the retail market. This order structure gives Inner Mongolia producers exceptionally strong anti-interference capacity in their production planning—even as spot prices continue to drift lower and room for futures market operations is compressed, companies can still rely on long-term contract cash flows to maintain basic operations, with output fluctuations far smaller than in other producing regions.

Ningxia: Passive Recovery Following Deep Losses

In stark contrast to Inner Mongolia's composure, the Ningxia production region experienced a sharp output cut in July. Squeezed by high costs (especially disadvantages in electricity pricing and raw material procurement) and downward pressure from steel mill tenders, most local producers fell into deep losses and were forced to proactively lower operating loads, causing regional output to plummet. As August began, production cuts continued, but marginal changes started to appear: toward month-end, the MnSi futures market showed a periodic rally, easing pessimism in the spot market, and some producers slowed plans for further furnace shutdowns. Although absolute output remains at a low level, a marginal recovery is visible month-on-month, displaying the typical characteristics of "marginal restarts driven by sentiment repair after a deep decline." However, constrained by an unrectified loss-making landscape, a full recovery in Ningxia still awaits clearer price signals.

Guangxi and Guizhou: High Electricity Costs Lock Down Restart Potential

Within the southern production region, conditions are equally uneven. In Guangxi and Guizhou, electricity costs have remained elevated for extended periods, making the cash cost of MnSi production significantly higher than in northern regions. Against the backdrop of continuously falling spot prices in July–August, the production economics for local producers were completely destroyed; even with sporadic orders, it was difficult to cover variable costs, resulting in operating rates stuck at extremely low levels and output lingering at the bottom. High electricity costs act like a "hard constraint," locking down any short-term restart potential—without electricity pricing policy adjustments or a sharp spot price rebound, output in these two regions will struggle to improve.

Yunnan: Dividend from the High-Water Season Realized, Output Climbs Steadily

Among southern producing areas, Yunnan has charted an independent course. After mid-June, Yunnan officially entered its high-water season, with abundant hydropower generation. Operating rates in July–August continued to climb toward full capacity, and regional daily output rose steadily, making it the only southern region contributing clear incremental volume. That said, while Yunnan's increased production has partially offset reductions in Guangxi and Guizhou, constrained by the limited total number of local producers and still-low MnSi spot prices, its incremental volume is insufficient to alter the overall loose supply picture nationwide. Instead, it has reinforced the seasonal structural feature of "rising output in the south, stable output in the north."

Outlook for September: A Moderate Recovery, but Not a Trend Reversal

Looking ahead to September, the possibility of a month-on-month recovery in China's MnSi output exists, but the magnitude and sustainability of that recovery still require observation. On one hand, the strong performance of coking coal and coke futures has injected a wave of periodic optimism into the black industrial chain, strengthening cost-side support expectations; some previously wait-and-see producers may re-evaluate the feasibility of restarts. On the other hand, as the traditional "Golden September, Silver October" peak season approaches, although steel mills are still feeling the lingering effects of the off-season, expectations for sequential improvement are warming, and raw material procurement demand is expected to recover marginally. Against this backdrop, long-term-contract-dominated regions like Inner Mongolia may maintain full-capacity operations, loss-ridden areas like Ningxia may continue to slowly raise output, Yunnan's high-water-season dividend will persist, while the high-cost constraints in Guangxi and Guizhou will remain difficult to resolve in the short term. Overall, September national MnSi output will most likely show a "moderate recovery" trend, but constrained by the actual pace of terminal demand realization and the industry-wide profit repair cycle, the height of any output rebound may be quite limited—more likely manifesting as a pattern of "bottom lifting with continued regional divergence."