More silicon mills in south-west China reopened in May amid rainy season

SHANGHAI, Jun 15 (SMM) – Operating rates across Chinese silicon metal producers continued to recover in May, rising 2.7 percentage points on the month and 3.4 percentage points on the year to 36%, as more producers in Sichuan and Yunnan restarted production. 

However, increased maintenance and suspension in Xinjiang, Fujian and Hunan in May capped the overall rise in the operating rates. 

The average operating rates for June is expected to further rally to 39% with the ramping-up capacity in Sichuan and Yunnan, SMM estimates.

Silicon plants in Hunan and Chongqing enjoyed greater subsidy for electricity, as compared with a year ago. This, together with eased drought in Yunnan, which drove local silicon plants to resume production earlier than the same period last year, accounted for the year-on-year increase in operating rates. 

The electricity prices in Sichuan were adjusted to levels for the normal-water period in late-April and to levels for the rainy season on May 25, facilitating the reopening of local silicon capacity. In Yunnan, the electricity price level for rainy season was implemented on May 1 in Nujiang and the implementation time in other production areas in Yunnan was postponed by a month. Delayed installation schedule of desulphurisation equipment together with pessimistic prospects for prices depressed the enthusiasm of some silicon plants in Yunnan to reopen furnaces. 

The average operating rates of silicon producers in Sichuan and Yunnan increased 7 and 8.2 percentage points, respectively, on the month in May, to 25.4% and 34.1%.

SMM expects the furnaces in operation in Sichuan and Yunnan to rise to peak levels by end June, and the capacity will fully release in July.

A large-scale silicon plant in Xinjiang halted operations for about a week in mid-May due to breakdown of power supply equipment, and this led to a 6,500 mt decline in its monthly output. The plant suspended again on June 8 due to failure of the grinding mill. It remains unclear when the producer will resume operation. Medium-scale silicon plants in Xinjiang ramped up production from a month ago in May, but this failed to offset the loss in output at large-scale plants. 

SMM data suggested the operating rates across Xinjiang silicon plants averaged 28.7% in May, down 4.5 percentage points on the month. 

In Fujian, the preferential electricity rates expire in June and the stimulus policy for the Q3 has not been determined. Local silicon plants plan to suspend for maintenance if they no longer receive preferential electricity prices. Silicon producers in Huaihua, Hunan province have restarted operations and seen slight profits, also on the back of local policy support for electricity rates. The amount of capacity in maintenance in May will likely resume production in June. 

SMM data showed that China produced 153,000 mt of silicon metal in May, up 3.3% from a month ago. The accumulative output during the January-May period stood at 738,000 mt, 1.8% lower from the same period last year, with the year-on-year decline narrowing 1.3 percentage point from the January-April period.