SHANGHAI, Jun 13 (SMM) – Chinese silicon metal producers operated at a lower rate on the month and year in May, as dry weather in the southwest deterred the reopening of plants in Yunnan and Sichuan, and as a shortage of ore led to production cuts at two major plants in Xinjiang.
An SMM survey showed that the average operating rate across producers of silicon metal in China continued to dip last month, falling 0.6 percentage point from April to 32.6%, standing 6.4 percentage points lower than May 2018.
This generated a year-over-year decline of 28.2% in production, the largest one seen in 2019. With output of 147,000 mt in May, output in January-May amounted to 751,000 mt, down 24.2% from the same period last year, larger than the decline of 23% in January-April.
SMM expects a supply deficit of over 100,000 mt in China’s silicon market for 2019, with social inventories by the end of the year likely to stand lower than a year ago.
Silicon producers in Sichuan and Yunnan gradually returned online in the month of May of previous years for the imminent rainy season, but this year’s dry weather in the south-west lowered operating rates by close to 3 percentage points year on year to 27.8% in Yunnan, and by 7.7 percentage points to 27.1% in Sichuan.
Insufficient rainfall limited power supply from hydro-power plants in Yunnan and Sichuan, and kept local silicon producers who have undertaken maintenance and stockpiled ample raw materials from resuming as planned.
The installation of environmentally-friendly equipment also impacted operations at silicon producers in Yunnan and Sichuan.
Operating rates across silicon producers in Xinjiang fell 8.7 percentage points from a month ago to 36.9% in May, as a silica shortage forced Hoshine and East Hope to slash production after Hoshine’s mines suspended at the end of April for environmental restrictions and safety checks.
Despite a low chance of a recovery of the mines in the short term, large silica stockpiles at other producers, stocks at traders as well as sufficient cobblestone supplies will keep silicon production in Xinjiang from breaking down in the coming months.
SMM expects the nationwide average operating rate at silicon producers to see a larger year-over-year decline of over 10 percentage points in June as weather forecasts say that Yunnan and Sichuan are unlikely to see heavy rainfall until the second half of the month.