The US announced that it would impose a 10% tariff on Chinese goods starting from February 1 and, in response China announced tariffs on some imported goods from the US from February 4 (imposing a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, large-displacement vehicles and pick-up trucks).
Then, on March 3, US president Donald Trump signed an executive order to raise additional tariffs on Chinese imports from the previous 10% to 20% – resulting in a 45% tariff on Chinese steel exports.
On the same day, the Tariff Commission of the China State Council announced that it would be imposing additional tariffs on some imported goods from the United States – with a 15% tariff on chicken, wheat, corn and cotton, along with a 10% tariff on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.
The latest announcement came on March 27 when Trump signed an executive order introducing import taxes of 25% on all cars and car parts coming into the US, which is set to take effect from April 2.
Supply chain disruption
The trade war between the US and China – and between the US and every other country – has led to an outbreak of tariffs, counter-tariffs and trade barriers disrupting global supply chains. Ferro-alloys, which are essential for steel production, have been indirectly affected by the direct tariffs on steel, which have created uncertainty in export markets, particularly for Asian producers reliant on US demand, sources told Fastmarkets.
“The huge steel exports from China in 2024 were the strongest support for the country’s steel output,” a ferro-alloys trader in China said. “That, in return, became positive factor for manganese alloy demand.
“But in 2025, steel exports [from China] will definitely be falling because of the US tariffs. And then, demand for ferro-alloys in China, including manganese alloys, ferro-silicon and ferro-chrome will be reduced accordingly.” the trader added.
According to Chinese customs data, the country’s steel exports amounted to 110.72 million tonnes in 2024, up by 22.7% from 90.26 million tonnes in 2023.
The ferro-alloys trader said that “in addition to the heavy US tariffs on China’s steel products, India, Vietnam and South Korea have also announced trade moves against China, which [has] hammered and disrupted the supply chain for steel and even upstream raw materials.”
Reduced demand for ferro-alloys
The imposition of tariffs and counter-tariffs has slowed down trade between the US and China, which are two of the large markets for steel and ferro-alloys.
This has led to reduced demand for ferro-alloys in some sectors, particularly in industries such as automotive and appliances, which are sensitive to trade policies, sources said.
“The [25% tariff on imported cars and car parts in the US] will cap demand for tungsten and manganese in car-exporting countries, with the former used in car parts for its hardness and high temperature-resistance, while the latter is used in automotive steel for its desulfurization or in battery raw materials for new energy vehicles (EVs),” a ferro-alloys trader said.
“China, Japan and South Korea are among the most affected countries in terms of the car tariff policy from the Trump administration,” the trader added.
Weak momentum in raw materials
Trade tensions have also led to lower raw materials price, such as silico-manganese and ferro-silicon, which are essential for steel production. These price cuts have squeezed profit margins for Asian ferro-alloys producers, especially those in China, which is the largest ferro-alloys producer in Asia, sources said.
The most-traded June ferro-silicon futures contract on the Zhengzhou Commodity Exchange (ZCE) closed at 6,146 yuan per tonne on March 27, down by 540 yuan per tonne from 6,786 yuan per tonne on February 5 in response to the 10% US tariffs on all Chinese goods, introduced on February 1.
Most-traded June silico-manganese futures contract on the ZCE closed at 6,204 yuan per tonne on March 27, down by 286 yuan per tonne from 5,918 yuan per tonne on February 5.
“The dropping futures prices show that the ongoing trade tensions have indeed shaken the ferro-alloys producers’ confidence in China, a China-based ferro-silicon trader said. “Many producers and traders in China have become quite pessimistic about when demand will recover under such trade tensions.”
Fastmarkets price assessments
Fastmarkets’ price assessment for ferro-silicon, 75% Si min, in-whs China was 6,050-6,150 yuan ($832-846) per tonne on Wednesday March 25, down by 250-350 yuan per tonne from 6,300-6,500 yuan per tonne on February 5.
Fastmarkets’ weekly price assessment of silico-manganese 65% Mn min, max 17% Si, in-whs China, was 5,900-6,000 yuan per tonne on March 21. The price was down by 500-600 yuan per tonne from 6,400-6,600 yuan per tonne on February 7.
A China-based silico-manganese trader said that, “Chinese ferro-silicon and silico-manganese prices have been on a constant decline since February, which has exacerbated the already severe oversupply situation [in China] and is [resulting in] losses among ferro-alloys producers.”
“I heard some ferro-alloys producers may choose to voluntarily suspend production,” the trader added.
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