Silicon and ferrosilicon are manufactured using broadly the same process and are physically similar, but are very divergent in terms of their applications. Silicon metal is used in the manufacture of aluminium alloys, silicones and polysilicon, whereas at least 90% of ferrosilicon is used in the production of iron and steel.
World production of both silicon metal and ferrosilicon is dominated by China. Historically, China’s dominance of global output was greater for ferrosilicon than for silicon metal. However, this is no longer the case; in 2016, China accounted for roughly 65% of world production of both products. China’s share of world silicon metal output has continued to follow a steadily increasing underlying trend, whilst the country’s share of global ferrosilicon production is in decline. Chinese ferrosilicon production has been subject to increasingly stringent government controls on overcapacity and emissions, whilst the country’s silicon metal capacity and output has been permitted to continue to increase. The extent to which this will remain the case over the coming decade is important for the wider sector.
In recent years, consumption growth for silicon metal has diverged significantly from that for ferrosilicon. The reason for this lies in the different end-use sectors which drive demand for these alloys. Global silicon metal consumption has grown at almost 6%py since 2010, supported by strong growth in all three of its main end use sectors (aluminium, silicones, and especially polysilicon). Consumption in the polysilicon sector has almost tripled since 2010, driven by the enormous growth of photovoltaic solar installations worldwide.
By contrast, global ferrosilicon consumption reached its peak in 2011, and has been on a declining path ever since. The fall in world demand was particularly substantial between 2014 and 2016. World ferrosilicon consumption in 2016 was 14% below its 2011 peak. The main reasons for declining ferrosilicon consumption are the slowdown in world crude steel production growth in recent years, a trend towards using less ferrosilicon per tonne of crude steel in China, and very slow growth in world output of iron castings, partly as a result of greater use of aluminium in place of cast iron in automobiles.
Prices for both silicon metal and ferrosilicon are primarily cost driven, and fairly inelastic to demand increases beyond short-term fluctuations, due to the huge global overcapacity in both industries. In recent years, production costs have trended down overall, but have been subject to a rebound in 2017 due to higher coal prices.
Roskill’s Silicon and Ferrosilicon: Global Industry Markets and Outlook report covers every aspect of the silicon and ferrosilicon markets, analysing developments and trends while also providing ten-year forecasts for supply, demand and prices.