Energy Economy

27 Sep 2021

China’s Silicon Export Prices up 60pc with Energy Curbs

27 Sep 2021  by   
Chinese export silicon metal prices have surged more than 60pc over the past week following further output cuts caused by energy consumption curbs in the key production hub of Yunnan province, with prices expected by market participants to remain supported because of tighter spot availability.

Argus yesterday assessed domestic prices for 5-5-3 grade metal at a 15-year high of 55,000-55,500 yuan/t ($8,502-8,579/t) delivered to ports, the highest since Argus launched this assessment in November 2006, up sharply by Yn22,000/t from 16 September. Export prices were assessed at $8,500-8,550/t fob, up from $5,120-5,150/t fob over the same period.

The price hikes came after Yunnan's development and reform commission on 11 September imposed its energy consumption control policy. This was aimed at cutting the province's average monthly output of silicon metal during September-December by 90pc from August, which was estimated by market participants at around 60,000-70,000t.

All producers in Yunnan's Dehong city suspended production at midnight on 19 September, with the producers typically accounting for around 38pc of Yunnan's total output. Smelters in Baoshan city in Yunnan have gradually cut or suspended production over the past two days. Producers in Yunnan's Nujiang city were only mildly affected by the measures because of a better energy consumption index.

China's price rally has also sent the European market to 15-year highs, forcing multiple large consumers to approach the market after cancelled deliveries.

China's Nonferrous Metals Industry Association (CNIA) held a meeting over 23-24 September to discuss the current market situation, in face of continued tight availability and the rapid rising prices. Several attendees of the meeting suggested imposing an export tariff on silicon metal to ensure domestic supplies, although the proposal has not yet been accepted. The country used to levy a 15pc duty on silicon exports before it cancelled the tariff in 2013 as Beijing adopted measures to clamp down on unlicensed tax-evading trading.

China exported 67,714t of the silicon metal (Si 99.99pc maximum) in August, up by 7.67pc from 62,890t a month earlier, and up by 45.83pc from a year earlier, official customs data show. Exports reached 533,417t during January-August, up by 42.31pc from the same period of last year.

Market participants expect China's 2021 total exports to reach 800,000t because of a recovery in international demand as the global Covid-19 pandemic eases, with average monthly exports for the rest of this year forecast tat 67,500t.

Some participants at the CNIA meeting also discussed introducing a futures contract for 5-5-3 and 4-2-1 grade silicon metals on the Guangzhou Futures Exchange. Warehouses for producers in the major production hubs of Xinjiang, Sichuan and Yunnan provinces, and for consumers in the major consumption hubs of Tianjian, Guangzhou, Zhejiang, Shandong, Jiangsu, Jiangxi, Sichuan, Kunming and Urumqi would be also built.

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