Ferroglobe (GSM) Q2 FY26 earnings call: guidance and Q&A

What is the status of discussions with relevant agencies regarding critical materials, and how quickly can domestic production be scaled?

Discussions with the U.S. Department of Energy (for 2 years) and Department of War (since February) are progressing rapidly. An initial proposal has been filed, and the next step involves providing a more detailed proposal including specific asks. The company aims to progress with investments based on these priorities.

“The discussions are progressing very fast, particularly in the United States. There are 2 departments that are particularly active, Department of Energy and Department of War.”

asked by Nick Giles · answered by Marco Levi

When will more details be shared on targeted critical materials products, potential economics, and government support?

Marco Levi reiterated specific products (magnesium, silver, gallium, ferromolybdenum, ferrovanadium, ferrochromium). He noted that ferroalloys can be produced with minimal CapEx in existing furnaces, with industrial tests underway for ferromolybdenum. Magnesium production, previously done by Ferroglobe, would require a new 20,000-tonne plant costing $180M-$200M. The company expects to have a clear competitive position on ferroalloy production by year-end.

“Our proposal is to start investing in a plant of 20,000 tonnes of magnesium investment will be between $180 million and $200 million.”

asked by Nick Giles · answered by Marco Levi

How will the White House's potential price floors on polysilicon benefit Ferroglobe, particularly for U.S. volumes?

The initiative, related to Section 232, aims to protect U.S. polysilicon players (Hemlock, Wacker) who are disadvantaged by energy costs compared to China. A floor price, if set appropriately, would allow these players to improve capacity, driven by solar and microchip demand, leading to increased demand for silicon metal in the United States.

“So the consequence is going to be more demand of silicon metal in the United States.”

asked by Nick Giles · answered by Marco Levi

What are the impacts of new trade policy on downstream steel in Europe, including capacity restarts and alloy demand, and channel inventory?

Increased European aluminum production is helping silicon metal demand. For steel, new measures effective July 1 (50% cut in safeguard fee for imports, 50% fee increase) are too early to fully assess, but some steelmakers have announced blast furnace restarts and capacity expansion. The environment sounds good for aluminum and steel, but energy costs remain an issue for European chemical players.

“It is true that some steelmakers have announced the restart of some of their blast furnaces in Europe and some others have announced capacity expansion. So the environment sounds pretty good for aluminum and steel at this stage.”

asked by Martin Englert · answered by Marco Levi

What drove the sequential improvement in silicon metal volumes in Q2, and were there any one-off factors like channel restocking?

The volume improvement, while still below 2024 levels, was mainly due to the nature of contracts and a restart of demand in the Middle East and Asia. The overall situation in Europe hasn't changed, with continuous increases in exports from China and Angola, leading to partial replacement of ferrosilicon with silicon metal. The company has provided data to the European Commission for an investigation.

“The overall situation of silicon metal in Europe has not changed, as you can see from the pricing situation. And I must say that it has even more problematic due to the continuous increase of export outside of China and Angola.”

asked by Martin Englert · answered by Marco Levi

Can the company quantify the scope or dollar amounts targeted for cost reductions and efficiency gains?

It's premature to provide precise numbers. The strategy involves revisiting the asset footprint, concentrating production at competitive sites, and repurposing other assets for new critical raw materials. This transformation will also address overhead costs. More precise numbers will be communicated later in the year.

“Marketing is premature. What we have decided to do really revisit our asset footprint.”

asked by Martin Englert · answered by Marco Levi

What is the outlook for working capital in H2, especially if volumes increase, and what does this mean for shareholder returns like buybacks?

Beatriz expects a working capital release of approximately $15 million in the second half of the year. Due to current market conditions and the focus on critical materials, the company has chosen not to resume the share buyback program but assesses it weekly.

“My best estimation at the moment is that we're going to be still releasing working capital for the second half of the year around, I would say, $15 million, 1-5, yes, 1-5, not 5-0. And then of course, with the current market and why we are taking the decisions on the critical material our choice is not to resume the share buyback program for obvious reasons.”

asked by Nick Giles · answered by Beatriz García-Cos Muntañola

Given strong year-to-date ferrosilicon volumes, is there further upside, or should current levels be modeled?

In Europe, safeguards have helped volumes, and current levels are expected to be sustained in H2. In the U.S., strong antidumping wins eliminated imports from Russia, Kazakhstan, and Brazil, but these were replaced by imports from other locations (Angola, Uzbekistan, Bhutan). While U.S. steel product utilization is up (80% vs 74% last year), pricing is not optimal, requiring a balance between volume and price decisions.

“So there is demand but pricing is not optimal. So we will need to balance out between volume and price decisions.”

asked by Nick Giles · answered by Marco Levi