As shown in the previous chart, global silicon demand significantly exceeded supply during 2021 H1. The reverse was true in Q3. However, the surplus was not sufficiently large to return the market to balance. Moreover, significant supply deficits are projected from 2021 Q4 through 2022 Q2, amplified in the near term by power shortages and production restraints in China. Tightening supply will keep silicon prices elevated with the potential for further price increases in some markets through 2021 Q4 and possibly into early 2022.
The unprecedented increase in silicon prices to date have principally been driven by supply and demand fundamentals. However, rising power, raw materials, and transportation costs will have a significant impact on silicon prices going forward – so will economic growth and, by extension, the strength of silicon demand. Factors that will shape silicon supply, include Chinese government policies, thermal coal prices in China, transportation bottlenecks, and the timeframes for the reactivation of idle capacity, furnace conversions and investment in new brownfield and greenfield capacity.
