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.
