Manganese prices struggle as structural demand builds

By June 20, 2025, manganese’s H1 gains had eroded and ore prices fell to US$4.21.

Eramet (EPA:ERA,OTCPL:ERMAF), a major producer, said it expected supply of manganese ore to increase in the second half of 2025, partly as key producers such as Australia returned volumes to market after earlier disruptions.

‘Ore supply should increase in H2, driven by the full return to the market of the leading Australian producer, partly offset by a potential downward revision of South African exports,’ the company notes. Demand for manganese alloys was expected to weaken in line with seasonality and softer global steel production.

Analysts cautioned that production expansions from major manganese producers could exacerbate oversupply. “Production increases … can only lead to oversupply, leading to a reduction in price,” one industry executive said.

Protectionist measures in key markets, including new EU quotas on ferroalloys, added uncertainty by potentially disrupting traditional trade flows and affecting alloy pricing dynamics.

Beyond the steel sector, structural shifts in consumption patterns emerged.

Although steelmaking still accounts for the lion’s share of manganese demand, interest in battery-related uses, particularly high-purity manganese for lithium-ion and next-generation EV chemistries, continued to gain attention.

“Our expectations of ongoing strengthening battery-grade demand and production in China in Q4 have been tempered somewhat by ongoing challenges within the nickel cobalt manganese (NCM) market,” Rob Searle, battery raw materials analyst at Fastmarkets, wrote in a November battery metals market update.

“While we expect a level of demand ramp-up in Q4, in the wider context of geopolitical challenges and a challenging Chinese market, the manganese demand uptick in the short term could be somewhat tempered,’ he added.

Changing battery chemistries

During a June Supply Chain (SC) Insights webinar, experts noted that manganese-rich cathode chemistries are increasingly drawing attention as automakers seek to cut costs and reduce exposure to cobalt and nickel.

Andy Leyland, founder of SC Insights, pointed out “manganese-rich chemistry is really offering a good solution … in terms of costs,” highlighting the commodity’s role in emerging battery designs.

While high-nickel NCM batteries remain dominant, industry players are exploring manganese as a lower-cost, high-performance alternative in Europe and North America, where supply chains remain heavily reliant on imports, particularly from China. OEMs are under pressure to secure raw materials directly, with vertical integration and direct sourcing emerging as key strategies to manage price volatility and supply security.

John Mulcahy, supply chain specialist at SC Insights, emphasized that sourcing upstream allows companies to negotiate better terms and reduce exposure to market fluctuations, even amid low pricing environments.

Manganese-rich chemistries are expected to expand steadily, complementing existing NCM and lithium iron phosphate (LFP) batteries, rather than replacing them entirely.

As Leyland noted, these materials are “definitely very high up on the focus from the demand side,” signaling growing adoption in the global push for cost-effective, low-cobalt battery solutions.

In March, Firebird Metals (ASX:FRB,OTCPL:FRBMF) produced its first lithium manganese iron phosphate (LMFP) EV batteries, becoming the first Australian company to achieve the feat. The move could position Firebird as a low-cost manganese cathode player, and highlights growth in the LMFP battery production segment.

Rising nationalism presents trade challenges

With the demand picture for manganese showing promise, analysts warn that export restrictions in Gabon could lead to a supply crunch before the decade is over. According to the US Geological Survey, 63 percent of US manganese imports come from Gabon. In June, the African nation announced plans to implement an export ban in January 2029.

Gabon’s renewed push to ban manganese ore exports from 2029 underscores Africa’s broader shift toward value addition, but it also risks tightening an already fragile global supply picture, a Project Blue market note reads.

As the world’s second largest exporter, Gabon shipped more than 7 million metric tons of high-grade ore in 2024, material that is critical to both ferroalloy production and emerging battery supply chains.

An export ban would hit Chinese buyers and European processors reliant on Gabonese feedstock, while adding pressure to the high-grade market at a time when Australia’s GEMCO mine is expected to wind down later this decade.

Although in-country processing — through ferroalloys or batteries — offers a path to capture more value locally, it would require significant investment and could shift, rather than eliminate, environmental and logistical costs.

For global markets, Gabon’s move signals rising resource nationalism in Africa and a potential structural squeeze on manganese supply heading into the next decade.

“However, without large-scale investments from China, a key battery producer, such ambitious plans of African governments risk remaining unrealised,” the Project Blue overview states.

“China has invested in Africa’s mineral industry (e.g. Ghana), securing access to the continent’s high-quality raw materials, while keeping production of high value-added products directly in China.”

In early 2025, Euro Manganese (TSXV:EMN,OTCPL:EUMNF) scored a major boost when its Chvaletice manganese project was designated a “strategic project” under the EU’s Critical Raw Materials Act.

The move underscores the EU’s push to secure local supply of critical battery materials and could tighten the manganese market by prioritizing European production in the continent’s energy transition.

Oversupply vs. new manganese demand drivers

For 2026, analysts expect the manganese market to remain broadly balanced, but with pressures and opportunities on both the supply and demand fronts. However, longer-term fundamentals point to steady growth.

Global market forecasts indicate the manganese industry could expand modestly in value and volume by 2035, driven by ongoing demand from steel and increasing uptake in battery and clean-energy applications.

Some reports project market size rising through the decades, with Asia-Pacific demand remaining dominant and new opportunities emerging in the electrification and high-purity material segments.

Steel demand will continue to be the principal driver in 2026, with India’s expanding production offering a potential buffer against slower growth in China and Europe. Battery applications may not yet move the pricing needle dramatically, but their structural importance is increasing as automakers and cathode developers look to diversify away from nickel and cobalt reliance, a trend that could support manganese demand in the medium term.

“Looking ahead to the coming weeks and months, it is likely we won’t see too much further upward pressure on prices. Asian markets are heading towards the seasonal lull in demand and manufacturing activity in February as the Lunar New Year holidays begin,” Searle said in a January Fastmarkets report.

“At the same time, there are concerns around what China’s EV demand outlook looks like in Q1 2026, with changes to subsidy schemes potentially leading to softening consumption of battery-grade manganese.”

Vanadium market to see structural change?

As 2025 progressed, the vanadium market continue to grapple with weakness as steel production demand struggled to absorb available supply and the broader metals complex remained in the doldrums.

Vanadium pentoxide prices stayed under pressure in most regions, with figures from the second quarter showing US prices near US$9,584, and Chinese prices around US$8,655, reflecting tepid buying activity and ongoing oversupply, even as emerging applications such as VRFBs sustained pockets of interest.

As mentioned, a key factor has been sluggish steel sector demand. Globally, crude steel production has weakened, particularly in China — historically the largest vanadium consumer — slowing vanadium’s traditional core market as rebar and structural steel consumption softened amid broader economic headwinds.

Although new Chinese rebar standards introduced earlier in 2025 mandate higher vanadium intensity in steel, anticipated increases in consumption have only partially materialized, leaving producers competing for limited contracts and putting downward pressure on average ferrovanadium and vanadium pentoxide prices.

At the same time, market participants reported that producers were cutting output and tightening supply in response to persistent low pricing. Several companies in China and the west curtailed production or deferred capital projects, indicating that margins were strained and cost discipline was becoming an industry imperative.

Global vanadium production has been declining since 2021, when the US Geological Survey reported total global output of 105,000 metric tons; that’s compared to 2024’s 100,000 metric tons.

Emerging vanadium demand from energy storage

Despite headwinds, structural changes in vanadium demand were evident in H2 2025.

VRFBs continued to gain momentum as more utility‑scale projects were announced and commissioned. The technology’s appeal lies in its scalability, long cycle life and safety profile compared to conventional lithium‑ion systems; installations in China, Japan and North America point to a slowly growing pipeline of demand outside steel.

Industry analysts have noted that vanadium demand from VRFBs could nearly triple by 2040 as long‑duration storage becomes a more integral part of renewable power grids, even if these applications currently represent a small fraction of total consumption. In China alone, installations of large‑scale VRFB systems were projected to consume tens of thousands of metric tons of vanadium pentoxide equivalent in 2025, offsetting some weakness in steel alloying use.

This bifurcation — weak traditional demand versus nascent battery demand — typified H2, producing a market where prices remained subdued, but underlying interest in new applications suggested a shift in fundamentals.

All eyes on Australia’s vanadium potential

Although US Geological Survey data shows Australia doesn’t currently produce vanadium, the nation holds the largest recorded vanadium reserves at more than 8.5 million metric tons.

Looking to tap this potential, the country has focused its attention on the industrial metal.

In January 2025, Australian Vanadium (ASX:AVL,OTCPL:ATVVF) received environmental approval from Western Australia for the Gabanintha vanadium project. The approval, granted by Minister for Environment Reece Whitby under section 45 of the Environmental Protection Act 1986 (WA), cleared the way for construction and production.

Shortly afterwards, the company’s namesake Australian Vanadium project, located in Western Australia’s Murchison province, earned a green energy major project designation.

The Queensland government has also invested in expanding refinement and processing capacity. Last May, construction began at Queensland’s first resources common user facility at the Cleveland Bay Industrial Park in Townsville.

The facility is designed to support the development, extraction and production of critical minerals, enabling the creation of mineral samples at scale and serving as a testing hub for commercializing production processes.

The government has identified vanadium as the initial focus, highlighting its key role in renewable energy applications.

In November, Western Australia launched a AU$150 million vanadium battery energy storage system project, aiming to make the state a leader in renewable energy and energy storage.

The 50 megawatt/500 megawatt-hour flow battery will use locally sourced and processed vanadium, and is expected to be the largest of its kind in Australia, supporting advanced manufacturing and a domestic supply chain.

Growing energy storage demand meets tightening supply

Looking ahead, analysts forecast that vanadium dynamics will begin to tilt in favor of tighter supply and strengthened pricing, though the timing and pace remain contingent on several variables.

A combination of reduced output and rising consumption — particularly from VRFBs — is expected to push the market toward a deficit by late 2026, encouraging a gradual recovery in vanadium prices.

Central to that shift is the energy transition. Demand for vanadium in long‑duration energy storage is projected to rise sharply as utilities and grid operators seek cost‑effective solutions to buffer renewables and stabilize electricity systems.

The vanadium market’s long‑term promise is underpinned by projections that VRFB deployment could grow at double‑digit rates, even as the bulk of demand remains tied to steel alloying.

On the supply side, a cautionary mood among producers — reflected in delayed project developments and tighter output discipline — may limit new material flowing onto the market in 2026.

With prices remaining below historical averages, many potential expansions are unbankable in the current price environment, meaning that new supply additions are likely to be limited absent a sustained price uptick.

“Vanadium market prices are likely to rise from late 2026, supported by tightening supply and growing demand from VRFBs. With weak prices in 2024 and 2025, driven by sluggish steel demand, vanadium producers have curbed output,” a CRU report published this past December notes.

Analysts at CRU project a late-year rebound, but caution that demand could triple by 2040 far outpacing production.

“Meanwhile VRFB demand is accelerating, evidenced by robust vanadium electrolyte project pipeline,” the firm’s report continues. “Rising demand will quickly run into depressed production, where prices will need to increase to support higher utilisation rates in mid-to late 2026.”