New European Commission safeguard measures will support ferro-silicon prices in 2026, but they will also drive increased substitution of the alloy with silicon metal.
The commission imposed safeguard measures on manganese alloys, ferro-silicon and ferro-silico-magnesium on 18 November. The safeguard measures comprise tariff-rate quotas and out-of-quota variable duties. Imports in excess of the quota are subject to an out-of-quota variable duty that is the difference between the established price threshold and the actual import price.
The commission has imposed an established price threshold of $2,408/t on ferro-silicon. This is more than double the average Argus assessment of $1,371/t ddp NWE as of 12 December.
Market gains clarity after a tumultuous 2025
The safeguard investigation that led to the implementation of safeguards drove several extreme spikes in volatility in the ferro-silicon market over the course of 2025.
Rare updates on the safeguard process, sudden bursts of speculation and delays led to periods with sharp surges in imports and transactions and then periods with almost no liquidity, as market participants waited for news from the commission. As a result, ferro-silicon prices were volatile across the year, with buyers and sellers alike unsure how to react. Market participants, particularly trading firms, bemoaned their inability to carry out advanced planning.
Prices rose in the first quarter, as market participants stocked up on third-country material in expectation of an announcement from the commission by April. When no outcome was announced, prices decreased from March-June. Prices rose sharply in late July and early August because of speculation that the announcement was forthcoming, and then plummeted again for September, October and much of November.
Safeguards to drive higher prices, volatility in 2026
After the announcement of the new measures on 18 November, prices jumped by almost $300/t and have since remained at around and slightly above $1,500/t. Most market participants expect prices to stay at current levels or higher in the coming year.
But continued volatility is expected. The new quota system, which renews every three months, is expected to result in altered purchasing habits as material enters the European market in bursts after the quotas renew.
In this first three months of the safeguard measures, many of the quotas have been utilised more slowly than market participants expected. Some are still not full.
But that has been attributed in part to hesitation from importers to try out the new system and in part due to low demand from end-users, which stocked up ahead of 18 November and are not buying in large quantities at present. One steel producer continues to refrain from buying and has been holding off since before the safeguards took effect, a senior executive at the company told Argus.
Many market participants expect a more rapid utilisation of the available quotas in the first and second quarters of 2026, as industry players adapt to the new dynamics and consumers work through much of their existing stocks. Significant quantities of ferro-silicon are expected to enter Europe over the days that immediately follow the start of each new period.
For consumers and importers, supply chain management has become significantly more complex and requires newly advanced planning. Importers now have more customs exposure, increasing their risk.
Silicon substitution may increase
Silicon metal can be substituted for ferro-silicon in many steel applications, although the deoxidisation provided by ferro-silicon cannot be completely replicated using silicon metal and iron powder.
Silicon metal has not been included in the safeguards, despite a strong desire for it to be subject to the measures from many ferro-alloy producers. Euroalliages, the main ferro-alloys industry association, [sought]( https://metals.argusmedia.com/newsandanalysis/article/2752028) the inclusion of safeguards in the initial measures. And major European ferro-alloys producer Ferroglobe continues to call for protectionist measures on silicon.
But with silicon currently not subject to any such measures, consumers are likely to purchase silicon in place of ferro-silicon when it makes sense to do so on cost.
Substitution is already taking place. Multiple large tenders after the implementation of safeguards went to silicon metal rather than ferro-silicon, a ferro-silicon producer told Argus. "As a manufacturer, we see it as an inconvenience that the customer gets used to using alternative products, and we are trying to avoid that by not pushing very high prices," the producer said.
The substitution possibility is likely to put a ceiling on ferro-silicon prices below that of the minimum import price in 2026. If out-of-quota material is too expensive, consumers will turn to silicon metal, reducing demand for ferro-silicon and holding prices lower.
"Price dynamics will be following silicon metal instead of market supply and demand. It will be silicon metal substitution that will be the price setter, and that is far below the ferro-silicon market," the producer said.
But there is ongoing speculation that anti-dumping procedures for silicon metal are being prepared by the commission. If implemented, silicon metal would be more expensive than ferro-silicon from certain origins, which would reduce the substitution effect and support higher ferro-silicon prices.
