Capacity shutdown lowers Jul operating rates across silicon producers on year

SHANGHAI, Aug 14 (SMM) – Chinese silicon metal producers operated at lower rates than a year ago in July as severe losses caused capacity closure. 

An SMM survey showed that the average operating rate across silicon plants in China lost 7.8 percentage points from July 2018 and stood at 41.6% in July. On a month-on-month basis, the rate remained 7.2 percentage points higher as producers in Sichuan and Yunnan provinces reopened in a rainy season and a large producer in Xinjiang ramped up production after silica supply recovered. 

Run-rates across silicon mills in Sichuan and Yunnan rebounded nearly 20% month on month in July, with rates in Xinjiang rising 11.6 percentage points from June. 

SMM data showed that domestic output of silicon metal in July stood at 223,000 mt, down 13.8% on the year. Production in January-July amounted to 1.16 million mt, down 22.6% from the same period last year, some 1.9 percentage points smaller than the decline seen in January-June.

Last month, high-costs capacity in Chongqing, Qinghai, Inner Mongolia, Gansu, Hunan, and Fujian was forced to shut down on losses. Some silicon mills in north China’s Qinghai and Inner Mongolia shifted their capacity to produce ferroalloy products. Equipment failure suspended about five silicon plants in Sichuan, even as preferential electricity prices in rainy season reduced costs. The five mills currently have no plan to reopen in the short term. 

SMM expects the average operating rate across Chinese silicon producers to rebound to around 42.5 % in August as no more cutbacks are planned in light of the upcoming high season.