25/12/23
Viewpoint: EU safeguards may shift FeSi, Si demand
London, 23 December (Argus) — 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. By Maeve Flaherty Send comments and request more
information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All
rights reserved.
