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The major silicon metal producing regions including Yunnan, Xinjiang, Sichuan will have to cut their production.
The average asking price for polysilicon climbed by 32%
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| From January to September of 2021, the output of silicon metal increased by 39% year on year, and the annual output is expected to reach a record high of 2.78 million mt. The insufficient power supply will inevitably lead to a decline in the output in Q4. The impact of the dual control of energy consumption is more significant on the supply of silicon. The major silicon metal producing regions including Yunnan, Xinjiang, Sichuan will have to cut the production. Where the silicon plants cannot maintain the normal production from September to November. The power shortage also restricts production. The downstream production in the major silicon consumption areas in east and south China has mostly resumed after the short-term production restrictions.
firm rode a wave of polysilicon cost hikes, however, warned of a tough environment for future capacity developments.
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| Despite polysilicon production prices rising by around 10% on the back of high silicon powder prices during the coverage duration, the average asking price for polysilicon climbed by 32% to US$ 27.55/ kg throughout Q3, sending out revenues up by 33% to US$ 585.8 million. This resulted in a record quarterly gross profit figure of US$ 435.2 million, equal to a gross margin of some 74.3%. |
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| The silicon metal production in Yunnan and Sichuan will decline in Q4 due to the upcoming dry season. The large plants in Xinjiang will also lower the operating rates due to the power shortage and the control of energy consumption. China’s output of silicon (Si content ≤ 97%) and secondary silicon totaled 240,000 mt from January to September 2021, which will supplement the shortage in the silicon metal supply. The lower overseas price encouraged imports. The total silicon import volume reached 4,000 mt from January to September 2021, up 782% on the year.
There is basically no new capacity of silicon metal in 2021. The new capacities will be put into production intensively in the rainy season in 2022. The new capacities of organic silicon monomer and polysilicon will be put into production mainly in Q4 2021- H1 2022. The shortage of the silicon metal supply in H1 2022 will depend on the power supply in the dry season in southwest China and the downstream production capacity. The downstream production expands rapidly amid the stagnated low supply, and the shortage will intensify in 2022. |
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The silicon metal prices will maintain an upward trend under the dual carbon policy, and the pricing logic of resource-based commodities will be changed. The silicon metal prices may rebound in November amid the shrinking supply, the recovering demand of aluminum alloy, and the overseas restocking before the Christmas holiday. However, the prices may decline in December as the silicon plants will reduce their stocks. The silicon prices will stay high until the rainy season in June 2022, and the upward trend of the prices may extend until 2023. The delayed commissioning of the organic silicon and polysilicon capacities, the shrinking consumption of the organic silicon after the pandemic, and the new capacities to be put into production may bring risks to the market.
