[SMM Analysis] Long-Term Contracts Fail to Reverse Weak Fundamentals; Manganese Sulfate Prices to Remain Soft

Battery-grade manganese sulfate entered its demand off-season in May and June 2026, posting mild downward price corrections with limited downside and no sharp slumps in sight. Driven by preferential export tax rebate policies for ternary batteries in early H1, downstream manufacturers advanced export orders in bulk, creating a temporary tight supply situation. All plants operated at full capacity with no spare time for equipment maintenance. Starting from May, terminal demand softened noticeably, and some manganese salt producers suspended production for unit overhauls, dragging down industrial output temporarily. In June, overhauled facilities resumed production in batches, lifting overall supply and returning the market to a loose supply pattern.

Current market transactions are dominated by fulfillment of existing long-term contracts, with scarce new purchase inquiries and bulk restocking orders, leaving the loose supply-demand balance unimproved. Meanwhile, a slight pullback in sulfur prices marginally eased production costs and amplified bearish sentiment, slowing purchasing activity among traders and downstream buyers. Nevertheless, key raw materials including manganese ore and sulfuric acid remain at elevated price levels. Combined with baseline sales secured via long-term agreements, steep price declines are effectively contained, keeping spot prices range-bound and soft overall.

Two rounds of structural demand support will cushion downward pressure in the second half of the year. In Q3, orders for medium-nickel precursors will expand steadily; this production route consumes more manganese feedstock per unit output, delivering sustained rigid demand to prevent continuous price declines. As the expiration window of export tax rebates for ternary batteries approaches in Q4, battery manufacturers will front-load export orders and ramp up production and inventory preparation, triggering a temporary surge in manganese sulfate purchases to offset industrial oversupply.

Even with periodic demand recovery, substantial upward momentum for prices remains absent. Chronic overcapacity persists across the sector, and sulfuric acid prices are expected to trend lower going forward. Downstream enterprises consistently adopt just-in-time procurement and rational inventory control with no speculative trading activity in the market. As such, the overall price center will edge down moderately in H2, maintaining a weak oscillating trend.