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Silicon Metal’s 300% Price Surge Throws Another Wrench In Global Supply Chains

Silicon Metal's 300% Price Surge Throws Another Wrench In Global Supply Chains
Silicon Metal’s 300% Price Surge Throws Another Wrench In Global Supply Chains

By Tyler Durden 

Leading producers of silicon metal in China have been forced by the Chinese Communist Party (CCP) to reduce production by 90% below August levels from September through December amid a nationwide power crunch. Production declines may spark tighter supplies in the metal, threatening everything from computer chips to solar panels to medical implants to concrete to glass to automobile parts, furthermore throwing another wrench in chaotic global supply chains.

Bloomberg data shows silicon metal prices have jumped more than 350% since the beginning of July. This comes as power supply disruptions have become more intense over the last couple of months as CCP curbs power to energy-intensive industries because lower than the expected output at power plants has strained the country’s grid.

The ripple effects are alarming for chemical manufacturers who convert silicon metal into silicone-based products. “If you have silicon supply constraints, then you’ve got a problem,” Keith Wildie, head of trading at aluminum alloy-maker Romco Metals, told Bloomberg. “There is still some supply out there, but it’s trading at a clearing price that is obviously very high.”

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