SHANGHAI, July 8 (SMM) -- A recent SMM survey of 8 silicon metal producers (total capacity: 219.8kt/yr) revealed that operating rates at silicon metal producers in Heilongjiang province in June were 43.68%, down 0.79% from a month earlier. Operating rates were on downward track, which is due to impact from electricity price adjustment. SMM predicts that operating rates in this region will continue to fall in July.
It is reported that operating rates in Heilongjiang province had always remained stable as producers mostly use low-priced electricity supply from Russia. However, producers are required to use state-grid-standard electricity prices in recently years, as Chinese government has stepped up efforts to standardize and regulate electric power industry. In this context, electricity price advantages enjoyed by producers in Heilongjiang province are waning. After SMM have contacted with producers in Heilongjiang province, it is known that electricity prices in other regions will be set universally at RMB 0.61/kWh after electricity price crackdown by the government, but Heilongjiang province is an exception. Although it is reported that electricity prices will also be adjusted in Heilongjiang province in the future, the specific adjustment is not finalized. Some producers in that region told that electricity prices may be adjusted between RMB 0.35-0.37/kWh, but some also said that prices will be lifted to RMB 0.61/kWh, the same as other provinces.
The electricity price hike will exert certain pressure on silicon metal producers. It is reported that offers of #421 and #441 silicon metal in Heilongjiang province were lifted up between RMB 15,000-15,500/mt. Producers' unwillingness to move goods was strong, and they told that they would prefer to adopt a wait-and-see attitude towards future price trend. Some producers in that region also told t hat they were considering halting production, and some producers had already suspended production.
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