Recovery from maintenance further boosts operation across silicon producers in Sep

SHANGHAI, Oct 11 (SMM) – Operating rates of Chinese producers of silicon metal continued to climb in September as smelters in Xinjiang, Yunnan, Inner Mongolia and Qinghai ramped up production after returned from maintenance. 

A rebound in prices of low-grade silicon triggered a resumption of some producers in Guangxi, Guizhou, and Chongqing; unfulfilled long-term contracts encouraged production at two silicon mills in Fujian province. These also helped drive the increase in operating rates.  

An SMM survey showed that the run-rates across domestic silicon producers averaged 45.1% in September, up 2.8 percentage points from August but down 10.9 percentage points from September 2018.

Higher electricity prices in Shihezi of Xinjiang since August caused Jierong Silicon to shut down one of its two furnaces in operation. Jingxin Silicon closed completely since August on higher electricity costs, with production expected to fall 25,000 mt year on year in 2019. 

Supply from Hoshine Silicon held steady last month as a pickup in operating rates at its Shanshan plant offset the suspension of some furnaces that use high-cost electricity from the utility grid.

Silicon plants in Nujiang of Yunnan province are expected to scale back operation in November as a dry season sets in. Producers in Dehong of Yunnan will face advanced power shortage in late-October due to a surge of electricity consumption by virtual currency mining machines and lower rainfall levels. Local authority forecasted that power supply could only be able to meet the production of about 20 silicon furnaces in late-October, compared with 48 furnaces in operation at the start of the month. The implementation of dry-season electricity prices will be brought forward to November, a month earlier than previous years.

Production cuts are also expected in Liangshan, Ya’an, and Leshan in Sichuan province in late October as a rise of 0.06-0.09 yuan/kWh in electricity prices after the wet season may drive most silicon mills to the verge of losses. 

SMM sees the average operating rate across Chinese silicon metal producers edging lower to 44.7% in October.

According to SMM data, domestic output of silicon metal stood at 238,000 mt in September, down 11.2% on the year. Production in January to September amounted to 1.62 million mt, down 19.9% from the same period last year, some 1.3 percentage points smaller than the decline seen in January-August.