Silicon Costs Vary a Lot due to Different Electricity Prices, Silicon Prices Move at Lows And Close to Break-Even Point

SHANGHAI, Mar 3 (SMM) – Silicon metal smelting is an electrothermochemical reaction process carried out continuously in a RKEF with silica, carbonaceous reducing agent and loosening agent such as wood chips as raw materials. The purity of silicon dioxide in silica is normally about 99%. At the same time, there are certain requirements for iron, aluminium and calcium elements in silica used in silicon metal smelting. Low-grade silica generally requires 0.1%<Fe203≤0.15%, 0.1%<Ca0≤0.2%, 0.1%< Al203≤0.5%, and high-grade silica generally requires Fe203≤0.1%, Ca0≤0.1%, Al203≤0.1%. Carbonaceous reducing agents mainly include silicon coal, petroleum coke and charcoal, and the selection of reducing agents varies with different process ratios between regions. 

Silicon metal is an energy-intensive product. The normal power consumption per mt of silicon metal is around 12,000-13,000 kWh, and the unit consumption varies by 500-1,000 kWh/mt depending on the smelting process and raw material usage in different regions. In terms of cost, the cost of electricity accounts for about 30-40%, the proportion of carbonaceous reducing agent is around 30%. The unit consumption of silica is about 2.7-3 mt, whose unit price is cheap and of minimal volatility, accounting for around 10%. 

From the perspective of various costs, the price of electricity and the cost of carbonaceous reducing agents fluctuate the fastest. The following is a brief analysis of the current electricity consumption of silicon metal enterprises. 

At present, the power supply of silicon enterprises is mainly hydropower and thermal power. Among the main production areas, Xinjiang mainly uses thermal power, and the electricity price is relatively stable throughout the year. Currently, the electricity price of most silicon companies is around 0.31-0.35 yuan/kWh, and around 0.4 yuan/kWh at several silicon companies. The top two producers in Xinjiang have captive power plants. They also need to purchase external power to meet their own production. The power price is about 0.2-0.25 yuan/kWh. Yunnan and Sichuan, on the other hand, mainly use hydropower, with the electricity price fluctuating greatly along with the changes of high-water period, flat water period and low-water period. At present, the electricity price is now the highest for the year due to the current low-water period. Many plants in Sichuan use small hydropower, with subtle differences in the electricity prices. 

The current electricity prices at most of the silicon metal smelters in Sichuan are above 0.6 yuan/kWh. Silicon metal smelters in Yunnan are mainly distributed in Baoshan, Dehong Prefecture and Nujiang. The electricity price in Dehong Prefecture and Nujiang is about 0.5 yuan/kWh, and the electricity price in Baoshan is slightly lower. Electricity prices in Sichuan typically fall on April 25 due to the transition of low-water period to flat-water period and on May 25 when the flat-water period transited to high-water period. Electricity prices in Dehong Prefecture normally fall in June. 

The electricity prices in various regions have shown a year-on-year increase trend in recent years. For other production areas, the power costs of silicon enterprises in the south are generally higher than those in the north. For example, the electricity price in Hunan and Fujian exceeds 0.6 yuan/kWh or even around 0.7 yuan/kWh, and the electricity price in Inner Mongolia and Qinghai is mostly 0.4-0.5 yuan/kWh.

On March 2, the price of above-standard #553 silicon in east China was 17,200-17,500 yuan/mt, and the price of #421 silicon was 18,700-18,800 yuan/mt. The current silicon spot market has ample supply, and the downstream buyers purchase as required. Trades have been sluggish. Silicon prices stand close to producers’ break-even point. 

According to SMM data, silicon enterprises in Xinjiang have a profit of over 1,000 yuan/mt, and profits at silicon enterprises in Yunnan stand below 500 yuan/mt. Most of the silicon smelters in Sichuan suffer losses. (Calculated based on full cost). In view of the cost factor, any downstream room for silicon metal prices will be limited.