Electricity Prices Rise While Silicon Prices Remain Low, Leading to Intensive Production Cuts in Sichuan and Yunnan Silicon Enterprises [SMM Analysis]

In November, both Sichuan and Yunnan regions enter the parity or dry season, with local silicon enterprises facing electricity price hikes and significantly increased production costs. According to feedback from local silicon enterprises, electricity prices in Yunnan are expected to rise by 0.1-0.17 yuan/kWh in November, while in Sichuan, they are expected to rise by 0.07-0.1 yuan/kWh. Without considering changes in other raw material costs, based on an electricity consumption of 12,000 kWh, the cost for Yunnan silicon enterprises is expected to increase by 1,200-2,040 yuan/mt, and for Sichuan silicon enterprises, it is expected to increase by 840-1,200 yuan/mt. Other production materials such as silicon coal and electrodes have prices that are basically stable, with even a slight increase in silicon coal prices at the beginning of October. Therefore, the significant increase in silicon metal production costs is confirmed.

In the silicon metal market, spot silicon metal prices have risen by about 100-200 yuan/mt in the past two weeks. However, the increase in silicon metal prices is far less than the cost increase for Sichuan and Yunnan silicon enterprises. Additionally, the operating rate of northern silicon enterprises remains high, with electricity prices mostly at 0.35-0.43 yuan/kWh, combined with weak downstream demand in the fourth quarter. Based on the above background, some silicon enterprises in Sichuan and Yunnan have shut down furnaces in batches this week due to expected losses. According to rough statistics, after production cuts, about 34 furnaces in Sichuan are operating normally, a decrease of 24 from early October, and about 46 furnaces in Yunnan are operating normally, a decrease of 39 from early October. Overall, the production of silicon enterprises in Yunnan and Sichuan is expected to decrease significantly MoM in November, with Yunnan's production in November even lower than in December last year.