Chinese silicon market participants downplay benefits of proposed 10% reduction in industrial electricity rates

Chinese silicon market participants are downplaying the effect of a planned 10% reduction in electricity prices on silicon prices despite electricity accounting for around 40% of silicon production costs in the country.

Chinese Premier Li Keqiang on March 5 announced a 10% reduction in average electricity prices for industrial users in a move aimed at reducing manufacturers' production costs. The announcement follows a similar-sized reduction in industrial electricity charges last year. But market participants are downplaying the effect of the 10% reduction in electricity prices on fob silicon prices, telling Fastmarkets MB that in many silicon production hubs such as Yunnan province electricity charges are already directly linked to silicon prices. “For a number of years in Yunnan province, local government requirements mean that the electricity price is set in line with the silicon price, so that when the silicon price goes down, so does the electricity price…electricity and silicon are like a pair of mutually-linked commodities…therefore the 10% electricity...

Published

Huaqing Fu

March 20, 2019

14:32 GMT

Shanghai