Silicon has become one the most sought-after element. Due to its use in various industries and especially in the electric industry, silicon’s demand has been on the rise for quite some time now. Although it is the second most abundant element in the Earth’s crust, the world still faces a shortage of silicon. The basic reason lies in acquiring and processing pure silicon. Due to increased demand, silicon suffers a global production shortage.
This has led to a shortage of silicon supply, increasing the prices. Because of the recent noticeable increase in silicon prices, various industries have come under the fire, and there has been a lot of discussion on the material and different industry chains. In this article, we have discussed major reasons behind the increase in the prices of silicon over the last few months. Let’s look.
1. Hoarding of Silicon by the First-tier Manufacturers
The major reason behind the surge in silicon prices is the imbalance between the demand and supply of silicon. A ludicrous approach in this regard is exhibited by the first–tier manufacturers who keep piling up the raw material for future needs as well.
With their long-term orders, they try to get hold of as much raw material as possible, so that there is no risk involved when it is time to deliver. Silicon wafer major buyers are solar cell manufacturers, whereas they are dependent on polysilicon raw materials.
In their effort to be prepared for any shortage, and to have enough raw materials in their stock to deal with any kind of emergency, they keep stocking the raw material. Their hoarding has a dominos effect and triggers a ripple effect in various sectors. With hoarding and excessive storage of silicon, the demand increase putting a strain on the supply. The basic rule of economics prevails as the prices take a hike.
2. Energy Consumption Controls in China
China is the worldwide largest producer of silicon. However, due to a shortage of fuel such as coal, the processing cannot be carried out as it used to be. The production of refined silicon has experienced a dip owing to the lack of coal in China. The processed silicon is the basis for manufacturing microchips, transistors, car engine blocks, solar panels, medical implants, and various other applications.
Since not an ample amount of silicon is made, enough silicon cannot be supplied to various industries. Chinese provincial authorities have imposed energy consumption controls to regulate and control carbon emission reduction.
Due to green environment measures, the major producers of silicon in Yunnan (China) have been only providing 10% output. Because of this aggressive energy consumption measure, most facilities have stopped operating throughout the week. Instead, they open for a few days a week.
Because of energy rationing, silicon production has experienced a reduction. This has consequently increased the demand for raw materials, resulting in a price increase of 300%.
3. COVID-19 Shutdown
Due to COVID-19, all sectors experienced a shutdown. The same is the case with silicon manufacturers. The small quantity of silicon manufactured had too many buyers in the market, willing to pay a far higher price. Since China is the major producer of silicon, and the country that was struck badly by COVID, the situation of lockdown led to a shortage of silicon in the industry.
Silicon Specialist LLC
Silicon Specialist LLC is a leading company that deals in silicon products. These products are used across various industries including the sensitive sector of health. It indicates the significance and criticality of high-quality silicon to be used in applications.
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