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The steel industry remains the core demand sector for ferroalloys, but the growth momentum has shifted from expansion of new production capacity to optimization of existing capacity. In 2024,Chian, the national crude steel output is expected to remain stable, but the proportion of high-end special steel will increase to 20%, driving the growth of demand for alloys such as chromium iron and molybdenum iron.
Driven by the global energy transition and the upgrading of manufacturing industries, ferroalloys, as the core basic materials in sectors such as steel, new energy, aerospace, etc., are undergoing a profound transformation from “scale expansion” to “technology-driven”. As the world’s largest producer and consumer of ferroalloys, China’s market trends not only affect the domestic industrial chain security but also have a profound impact on the global industrial landscape.
(1) Acceleration of Green Transformation Driven by Policies
With the “carbon neutrality” goal incorporated into the national strategy, the ferroalloy industry is facing a comprehensive upgrade in environmental protection standards. Starting from 2024, the Ministry of Industry and Information Technology requires that the energy consumption per unit product of the entire industry decrease by 15% compared to 2020. Enterprises in key regions (such as the Beijing-Tianjin-Hebei region and the Yangtze River Delta) are required to complete ultra-low emission renovations by 2025. This policy forces enterprises to eliminate outdated production capacity and promotes the proportion of electric furnace short-process technology to rise to over 60%. At the same time, the hydrogen-based direct reduction iron (DRI) technology has entered the pilot stage. If commercialized successfully, it will completely change the carbon emission pattern of the traditional blast furnace – converter long-process.
(2) Technological iteration reshapes industrial competitiveness
Intelligence and high-endization have become the key words in the industry. Leading enterprises have introduced AI smelting control systems, which have controlled the component fluctuation rate of silicon ferroalloys and manganese ferroalloys within ±0.5%, increasing the yield rate to over 98%. In terms of materials, the application penetration rate of high-purity silicon ferroalloys (with a purity of ≥99.5%) in the photovoltaic polycrystalline silicon field has exceeded 30%, driving the growth of product value by 50%; the demand for rare earth silicon ferroalloys in the permanent magnet motors of new energy vehicles has grown at an average annual rate of 25%, pushing enterprises to transform towards the high-end market.
(3) The demand structure exhibits a diversified characteristic.
According to a report by the China Research and Planning Institute, the steel industry remains the core demand sector for ferroalloys, but the growth momentum has shifted from expansion of new capacity to optimization of existing capacity. In 2024, the national crude steel output is expected to remain stable, but the proportion of high-end special steel will increase to 20%, driving the growth of demand for chromium iron, molybdenum iron, and other alloys. At the same time, the new energy sector has become a new growth pole: the demand for high-purity silicon iron in the photovoltaic industry has increased to 15%, and the demand for niobium iron and titanium iron in new energy vehicles has an average annual growth rate of over 20%. In addition, the demand for special alloys with high temperature resistance and corrosion resistance in aerospace and rail transportation fields continues to be released, forming a dual-drive pattern of traditional and emerging markets.
(1) Supply-side: Concentration Enhancement and Capacity Optimization
The industry’s CR5 concentration has exceeded 40%. The three major industrial bases in Inner Mongolia, Guangxi and Guizhou account for 65% of the national output. Leading enterprises have achieved a double improvement in scale and efficiency through “capacity replacement + intelligent transformation”. The production capacity of single factories has exceeded 500,000 tons per year. Meanwhile, due to the pressure of environmental protection transformation costs, about 20% of the backward production capacity has been eliminated. The regional layout shows the characteristics of “western resource orientation and eastern technology orientation”: Inner Mongolia develops silicon ferroalloys and manganese ferroalloys relying on the advantage of electricity costs. Guangxi uses the agglomeration effect of manganese resources to build a manganese-based alloy base. While places like Jiangsu and Zhejiang focus on the research and development of high-end special alloys.
(2) Demand Side: Regional Differentiation and Scenario Deepening
With the advantage of the manufacturing cluster in the Yangtze River Delta region, the market share in East China exceeds 35%. Among them, Jiangsu and Zhejiang have seen a 15% growth rate in demand for special alloys. In South China, driven by the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, the demand share reaches 25%. Guangdong has particularly prominent demand for high-purity ferro-silicon and rare earth alloys. In the central and western regions, due to the accelerated layout of the new energy industry, the demand share has gradually increased to 20%. Photovoltaic silicon material enterprises in Sichuan and Yunnan have become the main purchasers of high-purity ferro-silicon. From the perspective of application scenarios, the demand for construction steel has dropped to 40%, while the demand in energy, transportation, and electronics sectors combined accounts for over 60%, and the demand structure continues to become more upscale.
(1) Leading enterprises dominate the high-end market.
Enterprises such as Erdos and Minmetals Development have established a triple barrier of “resources + technology + brand”, occupying 70% of the market share in high-end silicon ferroalloys and chromium ferroalloys, with a gross profit margin exceeding 25%. Their competitive advantages lie in the following aspects: First, they control high-quality mineral sources (for example, Erdos has the world’s largest silica rock mine), ensuring the stability of raw materials; second, they have established strategic direct supply relationships with large steel enterprises such as Baowu and Hebei Steel, with the contract amount accounting for over 40%; third, through the integrated layout of “alloys + energy”, they have reduced production costs by more than 15%.
(2) Small and medium-sized enterprises focus on specialized market segments
Facing the pressure from large enterprises, small and medium-sized enterprises have broken through through differentiated competition. Some enterprises focus on high-purity silicon iron for photovoltaic applications, increasing their market share to 30%. Other enterprises adopt the “alloy + customized service” model to provide low-titanium and low-aluminum special alloys to new energy vehicle manufacturers, significantly enhancing customer loyalty. Additionally, the penetration rate of e-commerce platforms has exceeded 10%, and the annual transaction volume of the platforms has grown by more than 30%, providing small and medium-sized enterprises with a low-cost path to reach the market.
(1) Greening: Low-carbon processes become the entry requirement
(1) Greening: Low-carbon processes become the entry requirement
The EU Carbon Border Adjustment Mechanism (CBAM) will be fully implemented in 2026. The cost of exporting high-carbon ferroalloys may increase by 10% to 15%, forcing enterprises to adopt technologies such as green electricity smelting, carbon capture, utilization, and storage (CCUS). It is expected that by 2029, the carbon emissions per ton of alloy in the industry will decrease from 2.5 tons to 1.8 tons. Low-carbon certification will become the passport for products to enter the high-end market. Additionally, the commercial application of hydrogen-based direct reduction iron technology will drive the transformation of ferroalloy production from “carbon metallurgy” to “hydrogen metallurgy”.
(2) Intelligence: Digital technology reconfigures production processes
Through the industrial internet platform, enterprises can achieve full-chain digital management from raw material ratio, smelting control to product inspection. For instance, a leading enterprise that deployed the “digital twin system” shortened the silicon iron smelting cycle by 20% and reduced energy consumption by 15%. Meanwhile, the implementation of intelligent warehousing and unmanned delivery has led to a 18% reduction in logistics costs. In the next five years, the industry’s automation rate will increase from 50% to 75%, and the average annual growth rate of intelligent transformation investment will exceed 20%.
(3) Globalization: Acceleration in the Layout of Emerging Markets
(3) Globalization: Acceleration in the Layout of Emerging Markets
After the RCEP came into effect, orders from Southeast Asia increased significantly, and the market shares of Vietnam and Indonesia rose to 25%. To avoid trade frictions, Chinese enterprises set up factories in Malaysia and Indonesia, accounting for over 30% of their total. Through the “local production + regional supply chain” model, their overseas revenue share was increased to 40%. Moreover, opportunities such as the “Vision 2030” in the Middle East and the industrialization process in Africa are attracting enterprises to accelerate their layout. It is expected that by 2029, the overseas production capacity share will exceed 20%.
