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Key takeaways:
Ahead of the Fastmarkets’ annual Asia Ferroalloys 2026 Conference, taking place in Hanoi, Vietnam, from March 24 to 26, industry sources highlight the key movements shaping Asia’s green ferro-alloys markets.
These include the rapid adoption of direct current (DC) electricity in smelting, increased access to clean energy, and the potential for demand growth from low-carbon steel projects as the EU’s Carbon Border Adjustment Mechanism (CBAM) is definitively implemented.
The increasing deployment of direct current (DC) electricity in submerged arc furnaces across Chinese ferro-alloys smelters is delivering significant reductions in both power consumption and coke use, directly lowering production costs and carbon emissions, according to market participants.
In recent years, new investments in silico-manganese, ferro-chrome, and ferro-silicon capacity in China have predominantly adopted DC smelting technology. Sources note that it offers considerable technological, economic, and metallurgical advantages over traditional alternating current (AC) furnaces.
“The adoption of DC in submerged arc furnaces not only aligns our smelting process with a power mix that includes clean energy, but also strengthens our competitiveness in the international market,” a spokesperson for Inner Mongolia Jinglei Industry Co. said.
The silico-manganese producer started the world’s first 36,000 kilovolt-ampere DC-powered furnace at the end of 2024. Throughout 2025, the company reported that DC technology saved them 10-15% on electricity consumption and 10% on coke per tonne of silico-manganese produced.
This trend is gaining momentum, particularly in Inner Mongolia, China’s primary ferro-alloys production hub. The region produced 17.628 million tonnes of ferro-alloys and generated 270 billion kilowatt hours of clean energy in 2025, both national highs, according to local government data.
The General Secretary of the Ulanqab Ferroalloys Industry Alliance (UFIA) explained the shift: “DC furnaces are developing quickly among smelters in Inner Mongolia, alongside the rise of clean energy resources.”
He added that compared with AC furnaces, DC facilities offer greater flexibility in responding to grid changes. “DC can save at least 10% electricity, allow for the replacement of coke with semi-coke, and enhance the efficiency of mineral ore fines, like chrome ore and manganese ore.”
Fastmarkets understands, however, that some producers remain cautious. “We chose alternating current for our new plant,” a manganese alloy smelter source in southern China said, citing concerns about the relative novelty and stability of DC technology. “But for sure, we will keep a close eye on its development.”
Leading international miners are also seeking to enhance sustainability across the value chain.
In a notable development, diversified miner South32 in December 2025 signed a memorandum of cooperation with Taiyuan Guohong Ferroalloy Co.
The partnership will focus on developing low-carbon manganese ore pellet, a move aimed at improving smelting efficiency, reducing energy consumption, and minimizing dust emissions.
“Most manganese ore in the market is lump, which can be directly used in submerged arc furnaces, while the rest is fines, which are mostly sintered,” a Chinese manganese ore contact explained. “This pelletization process is unique for enhancing the efficiency of manganese ore fines.”
Industry sources view such collaborations as a practical step toward low-carbon transformation, integrating upstream raw material innovation with downstream smelting operations.
Chinese steelmakers, the primary consumers of ferro-alloys, are increasing investment in decarbonization, a move that could generate greater demand for lower-emission alloys.
Zhenshi Oriental Special Steel Co., for example, began constructing a 100% green electricity-powered stainless steel project in the first quarter of 2025. With a designed annual capacity of 2.51 million tonnes, the project is expected to utilize high-end nickel and chromium materials.
A mill source commented that “Zhenshi’s move shows mills’ ambition to decarbonize… potentially meeting the carbon footprints of western countries where the CBAM regime is definitively implemented from 2026. That could be a breakthrough for lower-emission ferro-alloys demand.”
The immediate demand signal for green ferro-alloys from the steel sector, however, remains mixed.
The UFIA’s General Secretary noted, “We haven’t yet heard direct request for green or reduced-carbon ferro-alloys. But indirectly, demand will rise from those mills that have a strong intention to export low-emission steel.”
A purchasing manager from a major Chinese steel group producing both carbon and special steels elaborated on the internal dynamics.
“From the perspective of carbon emission, ferro-alloys account for quite a small share in total carbon emitted per tonne of steel produced,” he said. “However, our special steel plant does care about the carbon footprint of ferro-alloys, as their share can take up around 20% of total emissions for steel calculated based on CBAM’s standard.”
Despite the technological progress and growing interest in sustainability, Chinese smelters remain in a weak position to command price premiums for green ferro-alloys. No premiums have been reported since Fastmarkets launched its green ferro-chrome and green ferro-manganese differentials in the fourth quarter of 2024, as no deals have been confirmed.
“The pricing structure for premiums has not been formed,” said the UFIA’s General Secretary. “Carbon footprint calculations are still unclear, and there are no clear instructions on verification and certification. So, it’s not the time to discuss premiums.”
This pricing power is further eroded by market fundamentals. China’s ferro-alloys production reached a record 38.16 million tonnes in 2025, up 5.6% year-on-year, according to the National Bureau of Statistics (NBS).
In contrast, crude steel output continued its downward trend since its 2020 peak, falling by 4.4% on year to 960.81 million tonnes in 2025.
This supply-demand imbalance, coupled with a heavy reliance on the domestic market, limits producers’ leverage.
“We don’t know how much to charge [for our green ferro-manganese], and we don’t have the confidence to make it accepted by our users,” a ferro-chrome smelter told Fastmarkets.
A third steel mill summed up the economic reality: “Buying green ferro-alloys means a higher price for mills. The question is, can the mill pass the extra cost to end-users? Unless users can pay premiums for low-emission steel. But that is not realistic now.”
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