SHANGHAI, Jun 15 (SMM) – Operating rates across China’s silicon metal industry increased 4.2 percentage points from a month ago to 39.1% in May, SMM research found.

It was also up 5.9 percentage points year on year.

Overall output of silicon metal across the country came in at 205,400 mt in May, up 13.4% month on month and up 24.8% year on year.

As the rainy season came in south China, a growing number of silicon plants in major producing regions, Yunnan and Sichuan provinces, resumed their production in May. This accounted for the month-on-month increase in operating rate across the industry.

Production at most silicon plants in Nujiang in Yunnan swung into high gear in May as electricity charges had been adjusted for the rainy season. However, production in the region failed to reach full capacity towards late May as shortage of power supply affected normal operations.

Baoshan and Dehong, the other two major producing areas in Yunnan, adjusted their electricity charges to the rainy season mode from June 1. Power supply in Dehong was also not sufficient to support production at full capacity across the region and silicon plants there had to ignite the furnace as the local ministry of industry and information technology scheduled.

Some silicon plants in Baoshan held off on igniting furnaces due to higher electricity charges than levels seen in the same period last year or as the installation of desulfurisation equipment took some time.

Rain fell over large areas across Nujiang, Dehong and Lincang in Yunnan around May 30, which slightly eased power shortage.

In Sichuan, many furnaces at silicon plants in Ya’an and Aba were in operations in May, barely changed from the levels seen a year ago, while silicon plants in Leshan remained their operation at levels seen in dry season and had no plan to add production. Despite rainy-season electricity charges, operating rate in Leshan remained at low levels due to tight supply from small-sized hydropower station and low prices of chemical-grade silicon. Chemical-grade silicon is the main products at most plants in Leshan.

Electricity charges in Lianshan in Sichuan were mixed. Only Mianning in that region saw relatively more silicon plants running furnaces, while plants in Dechang and Xichang put off igniting furnaces until mid-to-late June on power shortage.

At the end of May, environmental inspectors from the central government settled into some provinces. As no inspectors have been heard to have settled into major silicon producing areas yet, SMM expects minimal impact on operating rates at silicon plants from the environmental probes. We expect the operating rate across silicon industry to increase to some 47% in June as production steps up in Sichuan and Yunnan.