What is the future trend for silicon metal from the visual angle of China industry?

1. What is Metal Silicon?

Metal silicon, also known as industrial silicon, is the product of smelting silicon dioxide and carbonaceous reducing agent in a submerged arc furnace. The main component of silicon is usually above 98.5% and below 99.99%, and the remaining impurities are iron, aluminum, calcium, etc.In China, metal silicon is usually divided into different grades such as 553, 441, 421, 3303, 2202, 1101, etc., which are distinguished according to the content of iron, aluminum and calcium.

2. Application field of metal silicon

The downstream applications of metallic silicon are mainly silicon, polysilicon and aluminum alloys. In 2020, China’s total consumption is about 1.6 million tons, and the consumption ratio is as follows:

Silica gel has high requirements on metal silicon and requires chemical grade, corresponding to model 421#, followed by polysilicon, commonly used models 553# and 441#, and aluminum alloy requirements are very low.

However, in recent years, the demand for polysilicon in organic silicon has increased, and its proportion has become larger and larger. The demand for aluminum alloys has not only not increased, but has decreased. This is also a major factor that causes the silicon metal production capacity to appear to be high, but the operating rate is very low, and there is a serious shortage of high-grade metal silicon in the market.

3. Production status in 2021

According to statistics, from January to July 2021, China’s silicon metal exports reached 466,000 tons, a year-on-year increase of 41%. Due to the low price of metal silicon in China in the past few years, coupled with environmental protection and other reasons, many high-cost enterprises have low operating rates or are directly shut down.

In 2021, due to sufficient supply, the operating rate of metal silicon will be higher. The power supply is insufficient, and the operating rate of metal silicon is much lower than in previous years. Demand-side silicon and polysilicon are in short supply this year, with high prices, high operating rates, and increased demand for metal silicon. Comprehensive factors have led to a serious shortage of metal silicon.

Fourth, the future trend of metal silicon

According to the supply and demand situation analyzed above, the future trend of metal silicon mainly depends on the solution of the previous factors.

First of all, for zombie production, the price remains high, and some zombie production will resume production, but it will take a certain period of time.

Second, the current power curbs in some places are still going on. Due to insufficient power supply, some silicon factories have been notified of power cuts. At present, there are still industrial silicon furnaces that have been shut down, and it is difficult to restore them in the short term.

Third, if domestic prices remain high, exports are expected to decrease. China’s silicon metal is mainly exported to Asian countries, although it is rarely exported to European and American countries. However, European industrial silicon production has increased due to recent high global prices. A few years ago, due to China’s domestic cost advantage, China’s production of silicon metal had an absolute advantage, and the export volume was large. But when prices are high, other regions will also increase production capacity, and exports will decrease.

Also, in terms of downstream demand, there will be more silicon and polysilicon production in the second half of the year. In terms of polysilicon, the planned production capacity in the fourth quarter of this year is about 230,000 tons, and the total demand for metal silicon is expected to be about 500,000 tons. However, the end product consumer market may not consume the new capacity, so the overall operating rate of the new capacity will decrease. In general, the shortage of silicon metal is expected to continue during the year, but the gap will not be particularly large. However, in the second half of the year, silicon and polysilicon companies not involving metal silicon will face challenges.