China’s Ferrosilicon Industry Navigates Inventory Shifts, Capacity Expansion, and Trade Headwinds

Inventory Hits Annual Low Amid Active Shipments

China’s independent ferrosilicon producers significantly reduced inventories in mid-July, with total stockpiles across 60 sampled enterprises falling 9.54% week-on-week to 63,500 tonnes—the lowest level this year. Inner Mongolia led the destocking trend, cutting inventories by 5,300 tonnes to 32,900 tonnes, reflecting manufacturers’ aggressive sales strategies amid improved market sentiment.

Production Rebounds Cautiously

Output edged up as some plants in Ningxia and other regions resumed operations, leveraging futures hedging to lock in margins. However, profitability remains strained: average losses exceeded 300 yuan/tonne in June across key production bases like Ningxia and Inner Mongolia, despite minor price recoveries driven by coal-market stabilization and anti-overcapacity policies.

EU Launches Third Anti-Dumping Sunset Review

The European Commission initiated its third sunset review on ferrosilicon imports from China and Russia on June 30, 2025. Investigating whether dumping and industrial harm would recur without existing duties, the probe covers the period from January 2024 to December 2024. This extends trade barriers in place since 2008, complicating export prospects for Chinese producers.

Silicon Steel Capacity Expansion Accelerates

Hualing Steel announced its second 200,000-tonne non-oriented silicon steel line will commence production in August 2025. This follows the first phase’s full-capacity operation and certification by leading EV manufacturers. By year-end, Hualing aims to operate 400,000 tonnes of non-oriented and 100,000 tonnes of oriented silicon steel capacity, targeting high-growth sectors like new-energy vehicles and power grids.

Cost Pressures and Policy Uncertainties

Electricity pricing remains a critical variable for cost control, with regional adjustments potentially reshaping supply elasticity. While anti-overcapacity measures may improve sector profitability long-term, weak seasonal demand persists: weekly consumption by top-five steel varieties dipped 0.76%, and steel mill inventories remained elevated at 15.38 days of usage.

Outlook

The industry balances near-term headwinds—trade friction, thin margins, and tepid demand—against incremental positives: inventory normalization, high-value silicon steel expansions, and policy support. Market stability hinges on cost discipline, export-diversification efforts, and demand recovery beyond traditional steel sectors.