SHANGHAI, Jul 13 (SMM) – The average operating rate across silicon metal producers in China rose in June, showed an SMM survey, as plants in southwest China’s Sichuan and Yunnan resumed in the first month of the wet season.

The gain in operating rates, however, was limited by shutdowns in some regions due to losses, an accident or the removal of preferential electricity tariff policy.

Operating rates across Chinese silicon metal producers averaged 37.5% in June, up 1.5 percentage points from the previous month, according to data compiled and calculated by SMM. China’s production of silicon metal expanded 9.3% on the month to 167,000 mt, bringing the tally for the first half of the year to 904,000 mt, down 27,000 mt or 2.9% from the same period last year, which was 1.1 percentage points larger than the decline seen in January-to-May.

On a yearly basis, June’s production fell 7.7%, while the operating rate was 3.1 percentage points higher as drought delayed the resumption of plants in Sichuan and Yunnan last year and as industry concentration improved on the back of the permanent closure of outdated capacity.

Furnace re-openings across Sichuan and Yunnan have almost reached the highest level for the wet season. In the beginning of July, power supply restrictions in Yunnan’s Nujiang shuttered about 60% of furnaces across the region for more than 10 days, which is estimated to wipe out about 6,500 mt of output for the month of July, and supply from the region will recover to normal in August.

In northwest China’s Xinjiang, the suspension of a large plant due to an accident in early June took more than 8,000 mt of output offline in June, while a medium-sized plant in Ili trimmed output due to losses. That lowered the average operating rate across the region to 24.27%. The large plant planned to resume production by July 12, and expects output of 7,000-8,000 mt for the month of July.

The number of plants in operation in south China’s Fujian has reduced to just one, as electricity tariffs in the region rose to 0.56 yuan/KWH after the removal of the preferential policy. Silicon producers in Fujian will struggle to weather the current market situation without preferential electricity tariffs.

There were also loss-induced shutdowns in Guangxi, Chongqing, Hunan and other regions in June, while potential losses in the current market situation kept some plants in Inner Mongolia and other regions from restarting production after the end of maintenance. SMM does not expect a substantial recovery across those plants in Q3.

The nationwide average operating rate across Chinese silicon producers is expected to hold stable in July compared with June, as the ramp-up of plants in the southwest and the reopening of the large plant in Xinjiang will be offset by curtailments in some other regions.