Executive Summary / Key Takeaways

• Ferroglobe PLC ($GSM) is strategically positioned to capitalize on a shifting global trade landscape, with robust U.S. anti-dumping duties already impacting the ferrosilicon market and anticipated EU safeguards expected to bolster European operations in 2026.
• The company demonstrated a significant financial rebound in Q2 2025, achieving $21.6 million in adjusted EBITDA, a substantial improvement from a Q1 2025 loss, driven by increased volumes and enhanced operational efficiency.
• Ferroglobe is actively investing in future growth, notably through its Coreshell partnership for silicon-rich EV battery anodes, with initial pilot plant results showing "simply outstanding" cycle efficiency.
• Despite withdrawing its 2025 guidance due to elevated market uncertainty, management expresses strong optimism for 2026, citing expected tailwinds from trade decisions, production curtailments, and macro-level defense and infrastructure spending.
• The company maintains a strong balance sheet, ending Q2 2025 with $10.3 million in net cash, supporting disciplined capital allocation including dividends and opportunistic share repurchases.

Ferroglobe's Resilient Foundation and Strategic Evolution

Ferroglobe PLC, incorporated in 2015, has established itself as a leading global producer of silicon metal, silicon-based, and manganese-based specialty alloys, serving critical and fast-growing end markets such as solar, electronics, automotive, construction, and energy. The company's foundational strength lies in its integrated operations, including ownership of quartz mines and a hydroelectric power plant in France, which provide a degree of supply chain control and cost efficiency. This integrated model positions Ferroglobe as a specialized player in the metals industry, contrasting with more diversified chemical companies that may rely more on external raw material sourcing.

The company's strategic journey has been marked by a significant financial turnaround, culminating in achieving a net cash positive position for the first time in its history in Q1 2024, a status maintained for six consecutive quarters through Q2 2025. This financial strength enabled the initiation of a capital return program, including quarterly dividends and opportunistic share buybacks. Ferroglobe has also embarked on long-term growth initiatives, notably brownfield expansion plans in the U.S. to increase silicon metal capacity, targeting a minimum of 60,000 tons with an estimated capital cost of $200 million, aiming for startup by early 2028. This expansion is designed to meet anticipated demand from the burgeoning solar and electric vehicle (EV) battery sectors.

Technological Edge: Powering the Future with Advanced Silicon

Ferroglobe's core differentiated technology revolves around its advanced electrometallurgical processes for producing high-purity silicon metal and ferroalloys. These proprietary processes enable efficient utilization of raw materials and by-products, such as silica fume, which finds application in concrete, offering enhanced efficiency in construction markets. This focus on process optimization provides a competitive advantage in cost-sensitive industrial segments.

A critical area of innovation for Ferroglobe is its partnership with Coreshell, aimed at developing silicon-rich anodes for EV batteries. This initiative directly addresses the industry's push to replace traditional graphite anodes, a material predominantly sourced from China. Silicon-rich anodes promise significant benefits, including lower costs, longer battery ranges, and shorter charging times for EVs. In Q2 2025, the new Coreshell pilot plant commenced operations, producing its first cells with "simply outstanding" cycle efficiency results. This technological advancement is pivotal for Ferroglobe, positioning it at the forefront of the energy transition and creating a competitive moat by offering high-performance, cost-effective materials for the rapidly expanding EV battery market. The company has invested a total of $10 million in Coreshell, underscoring its commitment to this transformative technology.

Navigating a Dynamic Competitive Landscape

Ferroglobe operates within a highly competitive environment, facing both direct and indirect rivals. Direct competitors include major materials science companies like Dow Inc. (DOW), Albemarle Corporation (ALB), and DuPont de Nemours, Inc. (DD), which offer broader portfolios in specialty chemicals and advanced materials. While these larger players often exhibit superior R&D capabilities and diversification into high-tech applications, Ferroglobe's integrated mining and energy assets provide a distinct advantage in cost efficiency and supply reliability for its specialized silicon and ferroalloy products. This allows Ferroglobe to maintain a competitive edge in price-sensitive industrial markets.

The competitive landscape is currently undergoing significant shifts driven by global trade policy. Ferroglobe, as the largest Western producer with substantial local operations in North America and Europe, is uniquely positioned to benefit from these changes. The company's flexible global footprint enables it to supply products locally, mitigating the impact of tariffs and trade restrictions. This strategic advantage is particularly relevant given the recent surge in low-priced imports from countries like China, which have significantly impacted European silicon metal prices, causing a 20% decline in indexes in Q2 2025 and reducing EU 27 producers' market share from 40% to approximately 15%.

Financial Performance and Operational Discipline

Ferroglobe's recent financial performance reflects its operational resilience amidst challenging market conditions. In Q2 2025, the company reported sales of $386.9 million, a 25.9% increase over Q1 2025. This growth was primarily driven by higher sales volumes across its product portfolio and improved pricing in silicon metal and manganese-based alloys. The company achieved a significant turnaround in adjusted EBITDA, rebounding to $21.6 million in Q2 2025 from a loss of $26.8 million in Q1 2025. This $48 million sequential improvement was largely attributable to increased production volumes, particularly from the restart of its French operations, leading to better fixed cost absorption and lower raw material and energy consumption as a percentage of sales (decreasing from 77.6% in Q1 to 65.5% in Q2).

Segment-wise, Silicon Metal revenue increased by 24.4% quarter-over-quarter to $130.1 million, with adjusted EBITDA improving to a $6.5 million gain from a $15.5 million loss in Q1. Silicon-Based Alloys saw revenue rise by 22.9% to $111.7 million, and adjusted EBITDA tripled to $7.2 million. Manganese-Based Alloys demonstrated the strongest growth, with revenue up 42.5% to $106.2 million and adjusted EBITDA reaching $16.8 million, driven by the restart of French assets and higher volumes.

Ferroglobe maintains a strong liquidity profile, with total cash of $135.5 million and a net cash position of $10.3 million as of June 30, 2025, marking its sixth consecutive quarter of net cash positivity. Operating cash flow in Q2 2025 was $15.6 million, with free cash flow being neutral. The company continues its disciplined capital allocation strategy, repurchasing 600,434 shares for $2 million and paying $2.6 million in dividends during Q2 2025. Additionally, Ferroglobe made the final principal repayment of its SEPI loan in June 2025.

Outlook and Strategic Initiatives

Despite the positive Q2 performance, Ferroglobe prudently withdrew its 2025 guidance due to heightened macro uncertainty and limited visibility, particularly concerning global trade policy and regulatory developments. However, management remains optimistic for 2026, anticipating significant tailwinds. The U.S. ferrosilicon market is already benefiting from anti-dumping and countervailing duties imposed last year on imports from Russia (over 1000% combined duties), Kazakhstan (33-281%), Brazil (14-73%), and Malaysia (17-51%), which accounted for 71% of U.S. imports in 2023. New tariffs ranging from 20% to 50% are also expected for other Asian ferrosilicon importers. These measures are expected to continue improving U.S. market dynamics, as evidenced by Ferroglobe recording its highest volume of ferrosilicon sales in eight quarters in Q2 2025.

In Europe, an ongoing EU safeguard investigation into silicon metal, silicon-based, and manganese-based alloys is expected to reduce import-driven price pressure and provide meaningful support for fair competition and improved pricing in 2026. Production curtailments of silicon metal in China, Europe, and Brazil also signal an unsustainable price level, suggesting a market stabilization and potential price reversal. Macroeconomic factors, such as increased NATO defense spending and Germany's $500 million infrastructure investment, are expected to boost demand in the steel and aluminum industries, further benefiting Ferroglobe's key markets.

Operationally, Ferroglobe is leveraging its flexibility by switching two silicon metal furnaces to ferrosilicon production (one in the U.S. and one in Europe), increasing annual ferrosilicon capacity by approximately 35,000-40,000 tons to capitalize on better economics. The company is also implementing a Sales and Operational Planning (S&OP) process, targeting a $50 million improvement in working capital in 2025, alongside planned capital expenditures of $60 million to $65 million.

Key Risks and Challenges

The primary risks for Ferroglobe stem from the ongoing uncertainty in global trade policies and the volatility of commodity markets. Delays in the EU safeguard decision and the outcome of the U.S. silicon metal trade case (filed in April 2025 against Angola, Australia, Laos, Norway, and Thailand) could prolong market disruption. Aggressive, low-priced imports, particularly silicon metal from China into Europe, continue to exert significant pressure on pricing and market share. Furthermore, the inherent cyclicality of the metals industry and the lag between index prices and realized prices (typically two to three months) introduce forecasting challenges. While Ferroglobe's integrated assets provide some insulation, it remains exposed to fluctuations in raw material and energy costs.

Conclusion

Ferroglobe PLC stands at a pivotal juncture, strategically positioned to leverage a confluence of factors that could significantly enhance its long-term value. The company's disciplined financial management, evidenced by its net cash positive status and prudent capital allocation, provides a solid foundation. Its core investment thesis is deeply rooted in its ability to capitalize on a rapidly evolving global trade environment, where protectionist measures in the U.S. and anticipated safeguards in Europe are creating a more level playing field for domestic producers. This, combined with Ferroglobe's operational flexibility and strategic investments in cutting-edge technologies like silicon-rich EV battery anodes, underscores its potential for sustained growth. While near-term market uncertainties necessitate a cautious outlook, the underlying trends in trade policy, coupled with a strong technological roadmap and a commitment to operational excellence, suggest a compelling narrative for investors looking for exposure to critical materials in a transforming industrial landscape. The anticipated market improvements in 2026, driven by trade clarity and demand tailwinds, position Ferroglobe for a robust performance in the coming years.