The ferrosilicon market is in a gradual recovery phase in 2026 after two consecutive years of price decline. China FeSi75 export quotations are in the USD 1,040-1,150/t range, according to Chinese supplier data, recovering from a 2025 low of approximately USD 1,000/t in June. Domestic FeSi75 prices in the Ningxia region, which averaged 6,026 RMB/t at the start of 2025 and fell to 5,285 RMB/t by year-end, are estimated in the 5,800-6,500 RMB/t range for July 2026.
Steel demand — the primary driver of ferrosilicon consumption — is the key variable. Global ferrosilicon demand is expected to reach USD 10.7-15.7 billion in 2026, supported by carbon and stainless steel output, with Asia-Pacific accounting for an estimated 45% of global demand. High-strength and electrical steels — which require higher silicon content — are growing faster than the broader steel market, supporting a structural shift toward higher-grade FeSi consumption.
Magnesium production is the second-largest end-use segment for ferrosilicon, consuming an estimated 520,000 metric tons of FeSi globally in the Pidgeon process for magnesium metal production. As automotive lightweighting progresses, this demand channel provides a structural floor for FeSi prices even when steel demand weakens.
Trade policy adds complexity. China's 25% export tariff on ferrosilicon remains unchanged, raising effective landed costs for international buyers. The European Union imposed three-year safeguard measures on ferroalloy imports — including ferrosilicon — in November 2025, establishing country-specific tariff-rate quotas at 75% of 2022-2024 average import volumes, with out-of-quota volumes facing duties. EU producer Elkem ASA partially curtailed ferrosilicon production at its Rana plant in Norway and its Iceland facility in October 2025 in response to challenging market conditions.
Production costs provide a price floor. Ferrosilicon smelting is highly energy-intensive, with electricity representing 40-60% of total production costs. Power tariffs in Northwest China and the cost of metallurgical coke and quartz are the key cost drivers. The historical precedent of 2021 — when Chinese power rationing caused FeSi prices to spike 87% in a single quarter — demonstrates the extreme sensitivity of this market to energy policy changes.
On the cost side, strong metallurgical-grade silicon demand for solar and electronics applications is keeping upward pressure on power prices and raw material costs in China, supporting ferrosilicon margins. The metallurgical silicon market is estimated at USD 8.29 billion in 2026 with expected growth to USD 12.46 billion by 2035.
Bull case: Chinese steel output stabilization and magnesium demand growth push FeSi75 export prices above USD 1,200/t. Bear case: Prolonged steel demand weakness in China and Europe keeps FeSi prices at the lower end of the range. Base case: FeSi75 export trades USD 1,050-1,150/t through year-end, with domestic Chinese prices in the 6,000-6,500 RMB/t range.
For procurement managers sourcing ferrosilicon for steelmaking or magnesium production: (1) The 25% China export tariff is a structural cost — buyers outside China should factor this into landed cost calculations and consider alternative supply sources in Russia, Brazil, and Norway where available. (2) EU safeguard TRQs create a two-tier European market: in-quota volumes are competitive, but exceeding quota triggers significant additional duties. Track quota utilization monthly. (3) For Chinese domestic buyers, the current 5,800-6,500 RMB/t range offers fair value given the cost structure — producers are not earning excess margins at these levels, limiting downside. (4) Monitor power tariff negotiations in Northwest China — any increase will flow directly into FeSi prices given the energy intensity of production.