2019 China Automotive Materials Forum: Silicon supply shortfall to trigger higher prices in H1 2020

SHANGHAI, Sep 20 (SMM) – A sharp decline in the output of silicon metal, a raw material to produce aluminium alloy, in China this year is likely to result in silicon supply tightness in the dry season during the first half of 2020, and keep first-half prices at highs, said Yang Xiaoting, senior aluminium analyst at SMM.

She estimated a decline of 16%, or 420,000 mt, in domestic silicon metal production in 2019, which is likely to stand at 2.25 million mt. 

Lower silicon prices, drought in Sichuan and Yunnan provinces, as well as silica shortage in major production area of Xinjiang deterred the release of silicon smelting capacity, Yang told delegates at the 2019 China New Automotive Materials Forum at China International Industry Fair in Shanghai on Thursday September 19.

Lower operating rates dragged domestic silicon output in January-August by 21% from the same period last year, to 1.38 million mt, according to SMM data. 

For the rest of this year, silicon prices may stabilise with an underlying upward momentum as prices have already bottomed out, Yang said. Anticipations of a demand recovery in September-October and low inventories at traders are drivers behind a potential rally in silicon prices in the fourth quarter.