The global ferro-alloys industry has been affected by factors including weak downstream steel demand in China, raw material supply disruptions and flaring geopolitical tensions in recent months, meaning uncertainty and volatility remain significant themes as 2025 kicks off. Fastmarkets breaks down three key developments traders are hoping to see in the new year – and three challenges they don’t want to see.
Three things traders want to see in 2025
Better steel output and lower energy prices
Ferro-alloys traders are hoping to see increases in steel output in 2025, and, in turn, greater alloy demand.
European traders have been concerned with rising energy prices, so input cost improvements, such as reductions to energy prices, would ease some of the pressure on the region’s steel production.
Markets in China and Europe have been struggling with slow steel demand, which has resulted in weakened demand for ferro-alloys.
The situation has been particularly challenging in Europe due to high energy costs, which have affected both steel and ferro-alloys producers, with European steel association Eurofer issuing a stark warning of the potential for irreversible decline in the region’s steel and manufacturing sectors because of a lack of competitiveness.
The weakness in end-user demand in Europe in 2024 has contributed to higher supply and lower prices in markets such as ferro-chrome, for example.
As a result, in 2025, an upturn in activity among steel producers – perhaps supported by lower input costs, including energy – would be a boon to alloys markets.
While some traders have said they believe challenges will likely persist into 2025, other market participants are more optimistic for the coming year.
In China, for example, although winter steel restocking has been slow and the steel demand outlook pessimistic, the resulting reduction in ferro-alloy stockpiles ahead of the Lunar New Year suggests there could be a period of increased trading later in the first quarter.
An end to the Russia-Ukraine war
Traders said they would like to see an end to the Russia-Ukraine war in 2025, in light of incoming US president Donald Trump’s promise to seek a permanent end to the conflict.
The war broke out in February 2022 following Russia’s invasion of Ukraine, with ferro-alloys prices in Europe initially soaring over supply fears.
Significant increases in energy costs initially provided support, but the onset of the European energy crisis led to weak end-user demand and worsening economic conditions in the region, in turn pushing alloys prices back down.
One ferro-alloys trader said they hoped that peace talks could bring an end to the war in early 2025 and subsequently lead to improved demand as a result of less volatile economic conditions.
“[If the war ends] it could bring greater economic stability, improved demand and lower energy prices in Europe,” the trader said.
Vanadium batteries to boost vanadium demand in 2025
With the increasing demand for energy storage and renewable energy, the market for vanadium redox flow batteries has been developing rapidly in recent years, especially in China.
Traders hope this trend will further support vanadium demand in the country in 2025.
The leading application for vanadium remains in steel production, but some market observers suggest the addition of battery demand could push vanadium into tight supply or deficit, particularly in China.
“To my knowledge, more and more vanadium-related storage projects are launching or will be launched in the [coming] years, especially in China, which will certainly require increasing the amount of upstream vanadium raw materials,” a China-based vanadium trader said.
Three things traders do not want to see in 2025
Headwinds from new trade policies
Market participants have expressed concerns regarding uncertainty in the evolution of global trade policies in 2025.
Following the start of the new administration in the United States, an expansion of protectionist policies and tariffs is expected to be a key part of legislation for the new year and beyond, Fastmarkets has heard.
Resource nationalism is also expected to be a key theme going forward, with would-be exporting countries potentially opting for more isolationist trade policies to exert more control over their natural resources, sources said.
Chinese and European traders have expressed fears over the impact of the anticipated US trade duties on direct and indirect exports, and the potential increase in competitively priced steel exports from China as a result of such protectionist measures.
Extreme manganese ore price volatility
Traders told Fastmarkets that they do not want another year of extreme price volatility in the manganese ore market.
Manganese ore prices recorded massive fluctuations in 2024 following the suspension of operations at South32’s Groote Eylandt Mining Co (GEMCO) manganese ore facilities in Australia.
Fastmarkets’ assessment of manganese ore high-grade index, cif Tianjin peaked this year at $9.01 per dry metric tonne unit (dmtu) in mid-July and then plummeted below $4 per dmtu later in the year.
High grade prices have since been gradually rising, and similar, albeit slightly less dramatic swings have been observed in the semi-carbonate ore market.
Market participants have expressed hopes for greater stability in upstream markets to reduce cost uncertainty.
Persisting logistical challenges
Traders do not want to see a continuation of the logistical challenges present through much of 2024 as a result of the tensions in the Red Sea.
The Red Sea shipping crisis has been driven by ongoing Houthi attacks on vessels beginning in late 2023, resulting in major shipping companies rerouting around Africa’s Cape of Good Hope.
The crisis has led to longer lead times, higher shipping costs and greater difficulty in moving material from various alloy-producing countries into Europe.
The issue has affected the supply of 60-64.9% Cr content high-carbon ferro-chrome into Europe from India, for example – a key production hub for this material.
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