EU member states voted today to impose safeguard measures on ferro-manganese, silico-manganese, ferro-silicon, and ferro-silico-magnesium.
The measures are comprised of a tariff-rate quota (TRQ) combined with out-of-quota variable duties. The out-of-quota variable duty is the difference between an established price threshold for each product, and the actual price.
Silicon metal and calcium silicon were not included in the product scope of the measures despite the urging of some market participants and ferro-alloys industry association Euroalliages.
The chemicals industry was strongly opposed to the inclusion of silicon metal.
But Ferroglobe, a major European producer, said today it will continue to advocate for silicon metal to be included in future safeguarding measures.
The measures, which take effect tomorrow, will be in place for three years. But the practical details of the measures remain unclear after a highly unusual and last-minute voting process.
The vote was scheduled at the beginning of last week for 14 November. On that day the vote was postponed to 17 November, and then yesterday it was postponed once more to today.
Multiple market participants are not engaging in trading as they wait to understand the situation. A senior executive at a major steel mill said they are not buying currently because of the announcement.
The lack of clarity may impact purchasing decisions. "How can you buy first quarter material if you do not know if you can custom clear it?" a trader said.
The measures may reshape the European ferro-alloys trading space, as larger companies will take big tonnages and some smaller companies will come under heavy pressure to maintain operations due to the additional costs they will have to bear.
"This will be the end of trading as we know it, and for industry, it will be an added additional cost for no reason because they will not get any improvement on the current situation," the trader said.
But the measures will likely increase price volatility, a second trader said, which provides opportunities for smaller trading companies to find profit.
Norway and Iceland subject to safeguards
Norway and Iceland will be subject to the duties despite being part of the European Economic Area (EEA). Every three months, the commission will consult with Norway and Iceland to review the impact of the safeguard measures, the commission said today.
At a briefing in Brussels, the commission noted questions raised in Reykjavik and Oslo. But safeguards are allowed "explicitly" under the agreement between the EU, Norway and Iceland, a senior official said.
Under the measures, 75pc of Norway and Iceland's traditional imports will continue to enter duty-free, based on the last three-year period.
"Outside the quota, the established minimum threshold price permits additional imports, provided their prices remain at or above this established level, which is also favourable to Norway and Iceland as their prices are generally higher than those of other suppliers," an EC spokesperson said.
In a statement today, Norwegian ferro-silicon and silicon producer Elkem, which exports 160,000t of ferro-silicon to the EU annually, said the measure may result in a reduction in sales volumes allocated to the EU market. But Elkem expects the reduction in sales to be compensated by increased EU market prices.
A senior executive at an ex-Europe ferro-alloy producer said they will likely need to idle some capacity, as it is difficult to find good sales alternatives outside the EU.
Euroalliages is opposed to the inclusion of Norway and Iceland, and urged the EC to "intensify co-operation with its EEA partners", but it welcomed the trimonthly review.
But one trader, although opposed to the safeguards overall, celebrated the inclusion of Norway in the measures as essential for supporting higher prices in Europe. "Norway is by far the problem," he said of Norway's large share of EU imports annually.
