China urgently wants to reposition its domestic silicon metal sector as a strategic source for raw material for the nation because of the continual overseas anti-dumping policies against import of silicon from the country, the silicon branch of China Nonferrous Metals Industry Association said in a report on its website on Friday.
The association said that for many years, industrial silicon metal and organic silicon and polysilicon have been used as strategic materials in the US and Europe. While in the 1990s, China began producing industrial silicon metal, with a small volume for exports, which spurred the European and US markets to impose anti-dumping policies.
In the downstream polysilicon processing sector, China began mass production after 2008. But because of the overseas markets blocking the technical know-how and imposing anti-dumping polices on Chinese products, China had to shut down almost all of its polysilicon production units by end-2012.
CNIA said in the report that due to continual anti-dumping actions by overseas nations, it has urged the repositioning of the mainland China's silicon sector as the nation's strategic raw material source, as the country has made significant efforts in building up its silicon industry.
The association said that there has been intense competition among various key Chinese silicon production zones, especially that between Yunnan Province, Central China and Xinjiang Uyghur Autonomous Region, Northwest China. The Yunnan government has cut power costs in the region, enhancing its competitiveness and output, while Xinjiang, as of end-2016, accounted for 33% of China's annual national silicon metal output, with strong competitiveness, data from CNIA showed.
Yunnan, the country's biggest silicon production base, has provincial silicon output capacity of 1.2 million mt/year, while Xinjiang, the second largest, has output capacity of 1.05 million mt/year, according to CNIA.
CNIA said although China's silicon sector did not do well in 2016, it has a more optimistic outlook for the sector for the future.
Data from CNIA showed that an estimated 1.77 million mt/year new silicon metal capacity is planned, mainly in Xinjiang, for the next two-three years. But as multiple factors have plagued the new projects, the association expects the construction of the planned new output capacity to be delayed, meaning there will be limited capacity growth in the near term.
CNIA said that so far the domestic silicon metal sector has been a high-energy-and-resources-consuming and a high-polluting industry. Although some regional governments have preferential policies for their local silicon players to lift their competiveness, due to the expected limited room for a further fall in rigid costs, domestic silicon prices are likely to be stable in the future.
ANNUAL AVERAGE SILICON DEMAND GROWTH IN 2016-2020 SEEN AT 5%-10%
Data from CNIA showed that in the 12th Five Year Plan period (2011-2015), China's national silicon metal output and demand posted annual average growth rates of 12.4% and 13.2%, respectively, due to the downstream polysilicon sector having posted average annual output and demand growth of 28% and 23%, respectively, for the 2011-2015 period.
But it said that due to an anticipated slowdown in China's real estate and car sectors over 2016-2020, there will be a slowdown in demand for silicon from the downstream aluminum alloy and organic silicon sectors in the next few years. Also, there is lack of fresh demand from related sectors. Therefore, its forecast is that China's average annual silicon metal output and demand growth over 2016-2020 will slow down to 5%-10%.
The association said that China's domestic silicon sector would witness a change from the past few years' demand pull to the dual forces of demand and supply in the next few years.
