Sadhna Gupta, assistant manager of procurement research with Aranca, describes recent trends in the price and availability of silicon metal, an essential material for global manufacturing, as well as the outlook for the coming year. 

Silicon metal is a key ingredient in the manufacturing of products across multiple industries, including steel, aluminum, construction, solar cells, electric motors, auto parts and semiconductors. It comes in four basic grades, rated by purity, and China dominates production in all of them, Gupta says.

Electricity expense makes up more than 40% of the cost of production, so much of the global supply is sourced in areas with relatively low energy costs, including several provinces of China.

The price of silicon metal rose sharply in all four categories over the past two years, tripling or quadrupling between 2020 and 2022. Reasons included a limited supply, caused in part by government-mandated energy rationing in China, along with increased demand across industries.

Expect to see some diversification of sourcing in the coming year and beyond, Gupta says, but China will continue to dominate global production for the foreseeable future. Alternative locations for manufacturing of the various grades of silicon metal include Malaysia, Brazil and Norway, although none approaches China’s market share, which hovers at around 80% on a global basis. It’s followed by Europe with 15%, Brazil with 10% and a smaller amount from North America.

Worldwide prices of silicon metal are beginning to stabilize, Gupta says, as Chinese production returns to pre-2021 levels and manufacturers increase production capacity in other countries.