MethodologyContact usSupportLogin
Key takeaways:
Long-standing issues such as overcapacity, trade barriers and volatile raw material costs have plagued the sector. But the rise of hydrogen-fueled steelmaking, electric-arc furnaces (EAFs) and renewable energy appear likely to fundamentally reshape demand dynamics.
The green energy transition is fundamentally altering demand in the ferro-alloys industry. Traditional blast furnaces, which are highly reliant on ferro-alloys, are being supplanted by hydrogen-based steelmaking and EAFs. These are primarily fed with steel scrap, reducing the need for steel and ferro-alloys, industry sources said.
“Global steel production today remains dominated by the blast furnace-basic oxygen furnace [BF-BOF] processes, accounting for approximately 70%, while EAF contributes around 30%, despite significant regional variations,” Fastmarkets steel and ferroalloys analyst Emre Uzun said.
“China’s heavy reliance on BF-BOF production – around 90% as of 2024 – combined with its goal to raise EAF’s share to 20% by 2030, could weigh on ferroalloy demand,” Uzun said, “especially because overall steel output is also expected to gradually decline over the same period.”
The China Iron & Steel Association (CISA) intends to increase EAF-based steel output to 15% of total crude steel production by the end of 2025. And to 30% by 2035, up from approximately 11% in 2024.
A ferro-chrome industry contact also indicated that Chinese stainless steel mills were now incorporating as much as 20% of stainless scrap in their steelmaking processes. This is further reducing ferro-chrome demand.
The development of hydrogen usage, particularly green hydrogen, in the steel industry also threatens ferro-alloy demand.
“Companies such as [global steelmaker] ArcelorMittal are investing in hydrogen-reduced iron, which could further diminish the need for ferro-chrome and ferro-manganese,” a second China-based ferro-alloy source said.
Beyond steel, demand from the oil and gas sector, where ferro-alloys are used in drilling equipment and pipelines, is shrinking. This is owing to renewables displacing fossil fuels.
The automotive and aerospace industries are also shifting toward lighter materials. These include aluminium, carbon fiber and high-strength plastics in an attempt to meet emissions targets.
“It appears that ‘greener’ steelmaking will scale up over the next decade and into 2035,” Uzun added, “because downstream sectors such as automotive and others want lower embedded emissions in their products.” He cited examples such as US electric carmaker Tesla’s gigacastings and aircraft maker Boeing’s composite-rich aeroplanes.
Furthermore, improving steel recycling rates and policies in regions such as Europe and the US, that incentivize scrap reuse, are depressing primary ferro-alloy demand.
“This trend will necessitate greater adoption of EAF-based steelmaking, which primarily uses scrap metal and typically requires fewer alloy additions compared with the blast furnace [method],” Uzun said.
In response to potential demand contraction, the ferro-alloys industry is exploring usage diversification and embracing low-carbon production methods.
High-purity ferro-manganese and ferro-silicon are finding applications in certain battery chemistries. “Increasingly, manganese elements are used in battery raw materials because of their property stability and price-competitiveness compared with other inputs, such as cobalt or lithium,” a manganese ore sector source said.
Some alloys are also being added to electric vehicles for safety. As well as to renewable energy infrastructure for improved properties. For instance, ferro-manganese can increase the steel tensile strength of car bodies by 50%. And ferro-molybdenum enhances corrosion and high-temperature resistance in wind turbines and photovoltaic power facilities, market sources said.
On the supply side, green and reduced-carbon ferro-alloy production is gaining momentum, with producers using renewable energy in smelting.
“We may see an increase in demand for greener ferroalloys, making product differentiation, and investments in cleaner production processes and renewable energy [becoming] increasingly important from a supply-side perspective,” Uzun said.
But these shifts demand substantial capital and technological overhauls, which many traditional producers may struggle to afford. In addition, Europe’s Carbon Border Adjustment Mechanism (CBAM) will penalize high-emission imports. And this will compel steelmakers to reduce their reliance on high-emission ferro-alloys.
“It is a world-wise choice,” a second ferro-chrome contact said. They noted that increasing numbers of ferro-chrome and ferro-manganese smelters in China are obtaining eco-friendly certifications. This is to align with downstream steel mills’ preference for cleaner products.
Similar trends can be seen among ferro-chrome smelters in India and manganese alloys smelters in Europe.
Fastmarkets launched price assessments for green ferro-chrome and green ferro-manganese in China in October 2024.
Green ferro-chrome prices showed an uptick in the first quarter of 2025 due to restocking. However, they softened in the second quarter. And with no premium over conventionally produced products.
Fastmarkets’ weekly assessment of the price for green ferroalloy domestic, ferro-chrome 6-8% C, 50% Cr, ddp China, was 8,100-8,350 yuan ($1,129-1,164) per tonne on July 22. This is lower than the year-to-date peak but significantly higher than in early January.
The corresponding price assessment for green ferroalloy, domestic, ferro-manganese max 7% C, 65% Mn min, weekly inferred price, in-whs China, has largely trended downward since mid-March. And also without a significant premium.
“We are still in the early stages of this transition,” Uzun said, “and the shift to green steel will largely depend on whether buyers are willing to pay a premium for greener products and how much support governments provide.”
“The ferro-alloys sector isn’t just facing another cyclical downturn, it’s confronting a fundamental demand shift,” a China-based ferro-alloy analyst said. “Steel’s dominance in automotive and construction is fading, while recycling and lighter alternatives are reducing the need for raw materials.”
The industry could face prolonged contraction. Unless ferro-alloy producers rapidly innovate, developing low-carbon alternatives or diversifying into new markets such as battery materials.
“The green transition isn’t slowing down,” a fourth ferroalloy market participant said. “The question isn’t whether demand will shrink, but how quickly. For many in this industry, the next decade will be about survival, not growth.”
This is not aided by the significant supply glut in China, the world’s largest ferroalloys producer and consumer.
In the first half of 2025 alone, Ulanqab, a city responsible for one-third of China’s output, approved 32 new ferroalloy projects. This was according to the Ulanqab Ferroalloy Alliance.
“China and India expanded production rapidly, leading to oversupply,” a China-based ferroalloy source said. “But the bigger issue is weakening demand from steelmakers shifting to greener alternatives.”
Bulk ferro-alloy markets in China softened in the second quarter of 2025. This was due to pressure from oversupply, lower production costs and bearish sentiment stemming from Sino-US tariff negotiations, market sources said.
Prices for key products have slumped.
Fastmarkets’ weekly price assessment for ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China, was 8,100-8,350 yuan per tonne on July 22, compared with 8,100-8,300 yuan per tonne the week before. But largely on a downward trend since May.
Similarly, Fastmarkets’ weekly price assessment for ferro-manganese, 65% Mn min, max 7% C, in-whs China, was 5,300-5,400 yuan per tonne on July 18, compared with 5,350-5,450 yuan per tonne on July 11.
Beyond demand shifts, “tariffs and anti-dumping measures disrupt global trade flows of ferro-alloys. Besides, [prices for] ferroalloys raw materials such as manganese ore, chrome ore and silicon fluctuate due to geopolitical and supply chain issues,” the China-based ferroalloy source said.
For instance, a tropical cyclone in March 2024 caused disruptions for more than a year to manganese ore supply from South32’s Groote Eylandt Mining Co (Gemco) facility in Australia.
Ores and alloys are critical for producing the metal that builds our communities. Get the latest updates from Fastmarkets.