European ferro-silicon prices have trended down since the EU's safeguard quotas renewed in May, as plentiful supply in European warehouses weighed on import demand.
European ferro-silicon prices have fallen by 3.6pc since the start of the third safeguard period on 18 May. Argus last assessed prices at €1,240-1,280/t ddp NWE on 16 June, after holding rangebound for three weeks on sluggish spot trade.
An overhang of low-priced inventory imported ahead of the initial safeguard implementation in November 2025 has eased the pressure to import material and fill the quota. Much of this material remains in European warehouses as sellers anticipate higher prices once safeguard quotas begin to fill.
"There are still a lot of cheap units in the system," a trader said. "Those holders are waiting for better numbers."
The EU's smaller quota allocations for material from Brazil and other countries have already filled but larger quotas such as Norway and Iceland are taking more time.
Many suppliers have withdrawn offers at current levels and delayed sales in expectation of stronger pricing later in the year, market participants said. Near-term trading is expected to remain muted because of slow underlying steel demand and a seasonal slowdown in July-August.
"People are not offering at these levels," a trader said. "They are waiting for the quotas to fill further before selling."
But considering the cost impact from a recent jump in silico-manganese prices, after quotas for material from India and other countries filled in May, buyers may push to secure low-cost units before ferro-silicon prices can follow the same trajectory.
Once the allocated safeguard quotas are exhausted, ferro-silicon importers will have to pay a minimum import price, which is fixed at €2,408/t. This is much higher than the minimum import prices for other alloys included in the safeguard measures such as silico-manganese, which stands at €1,392/t. The minimum import cost for ferro-silicon is almost double current spot prices, making out-of-quota material particularly risky. This would leave trading firms that import beyond the allocated quota exposed to a significant loss unless prices in Europe increase.
Silicon metal presents an alternative
Silicon metal, which is also used as a source of elemental silicon and can partially substitute ferro-silicon, has become more attractive to buyers seeking to avoid higher ferro-silicon prices entirely.
Some buyers have chosen silicon as a substitute because of lower cost imports coming from Angola and China, a ferro-silicon producer explained.
Silicon metal, which was investigated but ultimately excluded from the safeguard measures in November, is a point of concern for European ferro-silicon producers that are unable to compete against lower-priced imports from third countries.
Historically, silicon has traded at a premium to ferro-silicon, but the spread between the two has narrowed since 2022, making substitution more attractive despite silicon's higher absolute price.
Argus last assessed European 5-5-3 grade silicon prices at €1,475-1,600/t ddp Europe works on 16 June.
