Higher costs in dry season lower Nov operating rates at silicon plants

SHANGHAI, Dec 13 (SMM) – Higher costs and narrower profits in dry season lowered operating rates across domestic silicon plants by 6.2 percentage points from October, to 50.6% in November, an SMM survey found. 

On a yearly basis, rates gained 3.3 percentage points. Production of silicon metal stood at 243,000 mt last month, down 10.6% from October but up 4.4% from last year. This brought silicon output in January-November 15.8% higher from 2018, standing at 2.54 million mt.  
  
In November, operating rates dipped significantly across both medium-sized and small silicon smelters in Yunnan and Sichuan provinces. Large-sized smelters also operated at a lower rate. 

Higher electricity prices and limited electricity supplies amid dry season in south China regions increased production costs. Falling prices of silicon in October-November narrowed profits at smelters, and this depressed production enthusiasm that resulted in suspension or cutbacks, SMM learned. 

Slow sales and losses pushed some smelters in Fujian and Hunan provinces to cut production in November. They are unlikely to lift cuts if prices of silicon remain at lows. 

Weaker-than-expected prices of silicon also weighed on operating rate at smelters in the north such as in Xinjiang. Unlike in previous years that Xinjiang smelters would operate at a higher rate after suspension across the south, they mostly kept operating rate flat on the month in November. 

SMM expects the overall operating rate of silicon producers to stand at 45% in December, lower than December 2017.