Chinese silicon metal output is set to dip in December as plant utilization rates in the key domestic silicon production zones are reduced further due to the start of the dry season, the China Nonferrous Metals Industry Association (CNIA) said Monday.
Silicon sector utilization rates in Yunnan province, central China, and Sichuan province in southwest China are expected to be lower over December to April, the dry season in China, during which hydro power supply -- which is key for silicon production in China -- is lower.
CNIA said that since mid-November, 14 silicon furnaces in Yunnan's Dehong prefecture had shut, while in Nujiang prefecture eight furnaces had been shut.
As a result silicon operation rates in the two prefectures had dropped to 65% from over 80% in October.
Yunnan, China's biggest silicon producer, currently has 72 silicon metal producers with silicon output capacity of 1.3 million mt/year, while Sichuan, the third biggest, has capacity of 700,000 mt/year, according to CNIA data.
CNIA said Chinese silicon trade was thin in November on a lack of demand, with the downstream polysilicon and organic silicon sectors keeping purchases stable and the aluminum alloy sector, a key silicon consumer, showing weak demand given reasonable silicon stocks.
It said with the aluminum alloy sectors in the provinces of Shandong, Shanxi and Henan facing strict environmental protection controls, alloy facilities have been running at relatively low rates, cutting demand for silicon metal.
CNIA said despite the commissioning of new silicon output capacity in China this year, it would take some time for it to generate stable output, meaning spot silicon would likely be tighter next month.
Chinese domestic prices for 553 silicon at Tianjin City were at Yuan 13,500-13,700/mt ($2,025-2,055/mt) last week, down Yuan 200-300/mt from Yuan 13,700-14,000/mt in the preceding week, data from CNIA showed.
It attributed the falling prices to high domestic silicon stocks, with inventories at key Chinese ports and trade zones as of the end of October higher than the same period last year.
Meanwhile, weather conditions in Xinjiang Uyghur Autonomous Region, another key Chinese silicon production base, are expected to continue to disrupt deliveries, CNIA said.
Supply by road in Xinjiang has become more difficult in the fourth quarter due to snow and rain, forcing silicon producers to turn to rail for delivery and increasing delivery times.
Xinjiang, China's second largest silicon producer, has current silicon metal output capacity of 1.05 million mt/year, data from CNIA showed.
