26/05/26
EU SiMn prices unlikely to move on filled quotas
London, 26 May (Argus) — The EU's tariff-free quotas (TRQs) for silico-manganese
imported from India and material imported from "other countries" was exhausted
on the first day of the third safeguard period last week, but tighter
availability of the alloy in the near term is unlikely to drive sharp price
increases as end-user demand remains low. The quota period renewed for the third
time on 18 May. Importers of silico-manganese from India, one of the largest
external suppliers to the EU, immediately submitted 41,993t for clearance,
exceeding the allotted quota of 31,959t by 10,034t. The Indian material was
fully allocated as of 22 May, but only 76pc of the material submitted for
clearance has been allocated within the quota. The rest has been cleared as
out-of-quota material. The EU instituted safeguard measures on silico-manganese,
ferro-manganese, ferro-silicon, and silico-magnesium on 18 November to protect
European ferro-alloy producers from more affordable third-country imports. The
safeguard measures comprise country-dependent TRQs combined with an out-of-quota
variable duty applied to material imported in excess of the quota. The variable
duty will be the difference between the established price threshold for the
product in question and the net free-at-EU frontier price, which is equivalent
to the cif price. The safeguard allocation is shared among importers rather than
operated on a purely first-come, first-served basis, which means that many or
most importers with Indian material currently awaiting clearance will be forced
to pay the minimum import price for a portion of their imports. The minimum
import price for silico-manganese is €1,392/t. That cif-equivalent price is
€287/t above the Argus silico-manganese assessment of €1,080-1,130/t ddp Europe
works on 21 May. One trader attempted to clear several thousand tonnes of
silico-manganese on the first day. He will have to pay a 600pc increase on 25pc
of his material, the trader said, netting out to an extra €120/t across his
total imports. Silico-manganese prices increased by €30/t on 21 May on upward
pressure from importers seeking to pass duty costs onto the consumer. In the
short term, some suppliers have increased their prices by €50/t, and are now
holding onto material and watching what will happen. "This doesn't mean that the
customers will accept higher prices immediately, because there will always be
someone sitting on cheaper units or unsold material, particularly for smaller
quantities," the trader said. But demand from end users has been tepid in 2026.
Because the possibility of safeguards was known well in advance of
implementation, most end users concluded contracts for this year or imported
significant quantities of material ahead of the implementation of safeguards.
Larger end users are not in the spot market currently because they are covered
by their contracts. And availability is not fully constrained as importers have
started to seek alternative sources of quota-free supply to traditional
mainstays such as India. The quota for "other countries", which comprises
developing countries that do not have country-specific quotas, has been
exhausted in both the second and third quota periods. The second period quota of
18,337t was exhausted on 19 March, well before the completion of the quarter.
For the present quarter, the quota of 18,956t was exhausted on 21 May. Norway,
where production is limited to a few large producers, filled its allotted quotas
quickly in the second quota period that started on 18 February. The Norwegian
quota of 35,859t for that period was exhausted on 9 April, with over a month
left before the quota renewal. For the third period, the Norwegian quota was
37,068t as of 22 May. A balance of 26,603t remained, with 116t awaiting
allocation. The Zambian quota of 7,882t for the current period had a remaining
balance of 4,288t with 1,277t awaiting allocation as of 22 May. This was an
increase in imports from the second period, which closed with a remaining
balance of 4,288t. Some market participants do not expect to see a significant
impact from quota exhaustion on pricing until end users' stocks are fully drawn
down. Combined with reduced consumption in the summer period as mills decrease
or pause production for annual maintenance, the main impact of the safeguards is
unlikely to be felt until the autumn. FeSi, FeMn less impacted by quota The
ferro-silicon and ferro-manganese quotas for the current quota period and for
previous quotas had not been filled as of 22 May. The comparatively high
interest in moving silico-manganese compared with high-carbon ferro-manganese
can in part be attributed to hesitation on the part of importers to add the
additional bureaucratic burden of the Carbon Border Adjustment Mechanism (CBAM)
to their operations. Silico-manganese is not subject to CBAM. "I think many
traders got a bit cautious on ferro-manganese because of CBAM, and honestly
that's what I did as well. I focused on silico-manganese because I didn't have
to worry about CBAM," a second trader said. Although silico-manganese prices are
roughly at parity with high-carbon ferro-manganese, ferro-manganese prices are
also being supported by CBAM. In terms of liquidity and demand, silico-manganese
is currently exceeding high-carbon ferro-manganese. By Maeve Flaherty Send
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