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Brazil outages could boost US silicon prices

Keywords: Tags  Brazil, silicon, silicomanganese, ferromanganese, manganese alloy, Nathan Laliberte


NEW YORK — Silicon production outages in Brazil could lead to supply shortfalls and spot price increases if the situation continues, North American silicon market participants said, although manganese alloy suppliers expect little impact on their market.

Spiking energy prices have led some Brazilian ferroalloy and silicon metal producers to temporarily suspend operations, according to trade association Associação Brasileira dos Produtores de Ferroligas e de Silício Metálico (Abrafe) (amm.com, July 21).

U.S. silicon metal prices have increased significantly over the past month, with sources noting that continued problems from power issues in Brazil had reduced U.S. imports.

AMM’s silicon metal price assessment rose to $1.40 to $1.44 per pound July 11 from $1.38 to $1.40 previously, although market sources reported transactions at higher levels for less-than-truckload volumes (amm.com, July 11).

"It’s too early to tell what the impact may be for the U.S. market," a U.S.-based silicon producer source told AMM. "If it continues over a period over time it will have a major impact in the U.S. and Europe. There will be a shortfall of inventory, and anytime you get that type of thing prices can skyrocket. Mostly, though, it seems people are taking a wait-and-see approach to this whole thing."

A second producer source said that robust global demand for silicon coupled with continued supply shortages could pose serious issues for domestic buyers.

"If it continues it will start to cause major problems," the source said. "Brazil is the largest producer of silicon metal in the Western World. Right now, you have a lot of capacity offline. If global economies continue to improve, we are going to run into a serious supply and demand imbalance. To have demand recovering and capacity reducing could make things very problematic for us."

Meanwhile, North American manganese alloy suppliers said they don’t anticipate the outages will have a meaningful impact on the U.S. market, with the majority of Brazil’s ferromanganese output reportedly going to Europe.

"Brazil has not been a major exporter of high-carbon ferromanganese to the U.S. market, and the amounts they have been bringing in are so small that I regard them as immaterial to market supply," a supplier source said. "They have recently become an active exporter of silicomanganese to the U.S. In my opinion, should the silicomanganese exports decrease or stop, I don’t believe this will create any market disruptions based on my belief that the market will continue to be supplied by the larger, more-traditional suppliers."

"If outages continue for more than a month or so we could see some indirect impact as trade flows to/from Brazil and other markets compensate," a second supplier source said.

Daniel Fitzgerald, New York, contributed to this story.


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