The shortage of silicon metal due to production cuts in China has become a new obstacle to the global economic recovery. According to Bloomberg, the deficit caused prices to rise 300 percent in two months.
Silicon is used in everything from computer chips and concrete to glass and car parts. The metal is also involved in the manufacture of solar panels, medical implants, deodorants, and more. Due to a silicon shortage, the chemical company Elkem ASA and several other companies have suspended sales of silicone-based products.
“If you have restrictions on the supply of silicon, then you are in trouble,” said Keith Wildeley, head of sales at Romco Metals. She noted that the metal can still be purchased, but said its market value is very high.
Since early June 2020, the price of polysilicon, which is used for solar panels, has risen 400 percent. Such a rapid rise in price can result in an increase in the cost of panels and the “clean” energy they generate. As economist Jenny Chase notes, solar cell manufacturers are already facing rising production costs.
Silicon shortages, increased oil prices and supply disruptions are having a devastating effect on markets and raising concerns that prices will continue to rise and the economy will decline.
Metallic silicon is produced by heating sand and coke in a furnace. Its usual cost ranged from 8 thousand to 17 thousand yuan (from 1,200 to 2,600 dollars) per ton. Now the price has risen to 67,000 yuan ($ 10,392). The sharp increase was due to a decline in production in China, which fell 90 percent compared to August. The country’s industrial centers have been ordered to cut carbon emissions in line with Beijing’s new green policy. The enterprises also experienced power outages, which also affected the production of metals.