SHANGHAI, Nov 7 (SMM) – Operating rates across Chinese producers of silicon metal continued to climb in October, rising 1.7 percentage points from September to 46.9%, with production at 243,000 mt, showed an SMM survey.
Higher production out of Xinjiang, Shanxi, Hunan and Guizhou provinces contributed to the month-on-month increase in operating rate, as a rally in silicon prices turned some capacity from losses to profits and encouraged production.
Silicon producers in Xinjiang stepped up operations as expected, to plug the supply gap generated by production reduction in Yunnan and Sichuan as a rainy season drew to a close.
Silicon production last month was also supported by the requirement in some regions that producers had to operate for a certain period of time in a bid to enjoy preferential electricity tariffs policy.
The three major silicon producing hubs in Yunnan—Dehong, Baoshan and Nujiang—began higher, dry-season electricity tariffs at the start of November, one month earlier than previous years.
Power supply shortages and higher tariffs prompted silicon producers in Dehong to begin to see production curtailments from the end of October, while operations in Baoshan maintained stable. Long-term supply agreements kept producers in Nujiang operating, albeit at a lower rate.
Liangshan, Ya’an and Leshan in Sichuan hiked the electricity tariffs in late October, leading to the closure of more silicon producers.
On a year-over-year basis, operating rates across Chinese silicon producers dropped 9.9 percentage points and production fell 10.4% last month, as the four-month rainy season in Delong and Baoshan this year was two months shorter than previous years and also generally weak silicon prices subdued operations in Xinjiang and Sichuan.
For the first 10 months of 2019, China’s production of silicon metals was 1.86 million mt, down 18.8% from the same period a year earlier. The decline was 1.1 percentage points smaller than in January-September.
Production for the full 2019 is expected to shrink nearly 400,000 mt from 2018.