Silicon Carbide & More - What's going on in silicon carbide, fused alumnia & many other industrial minerals.

Silicon Carbide & More

PO Box 503

Glen Ellyn, IL 60138-0503

Publisher: Kormac Kennedy��

Editor: Paul Harris

Phone: 57 4 354 1970

E-mail: kormac@siliconcarbideandmore.com

Click here to visit our blog

To contact us:

SiC: the calm before the storm

When polling SiC aficionados in early August regarding the price of SiC, SiC & More was told by several contacts that SiC prices had stabilized and more of the same could be expected during the remainder of 2017.

However, discussions with several traders leads us to believe that June and July represented a stable period whereas price increases would be likely during the balance of the year on virtually all SiC products. �I suspect that June and July simply symbolized a lull before the storm. With the anemic capacity utilization in China, lousy market prices, and the price increases on pet coke and anthracite, there is no way SiC prices will remain flat for the balance of 2017. In fact, I wouldn�t be surprised to see a $15-20/t hit in September/October and another $20-30/t before year-end,� one trader said.

A SiC producer added, �SiC furnace plants from around the world typically have fully loaded costs that exceed $800/t. After five years of low prices, it�s ludicrous to think that some of these producers will continue to operate at a loss.�

The price of graphite has witnessed incredible price increases since late 2016 and with energy, raw materials and a process that is not unlike SiC production, the sentiment amongst some SiC producers is that prices will increase substantially over the next 6-12 months.

How much will prices increase before year end? We truly have no idea, but we believe that if capacity utilization in China remains where it is today, and if anthracite pricing continues its march towards 2008 high levels, then the conditions will be right for additional price increases.

Aluminum oxide

After taking several price hits over recent months, BFA pricing has quieted down SiC & More #68 reported a trader commenting: �Yes, prices have leveled off but many of us expect to see small monthly price increases as the year progresses�. That statement was prescient as August saw BFA prices creep up and the outlook for September is for more of the same.

Still, processors and end-users can hardly complain when one considers that BFA prices are still $70-100/t cheaper today than during much of 2012-2014 and $125-175/t less than in mid-2008.

One of the two primary reasons for the stronger pricing is the Chinese equivalent of the US Environmental Protection Agency (EPA) that is forcing more stringent regulations on the Henan BFA smelters. Com�plying with regulations represented about a $10-15/t price increase for September shipments from China. The other reason is that demand exceeds supply globally although nearly in balance. SiC & More #68 pointed out that global BFA demand had increased whilst supply had contracted. That continues to be the case.

When it comes to pollution in Henan, a trader told SiC & More in June: �I recently visited Wudu and Pengan and I can assure you that most smelters will not be increasing capacity utilization. I say this based on the fact that many of these plants are only permitted to run their furnaces at night due to government anti-pollution regulations. These regulations are serious business in China nowadays. I don�t believe anyone should expect to see huge tonnages of BFA heading to ports.�

Anti-pollution regulations have forced several other furnace plants to shut their doors making it likely that 2017 capacity utilization will be lower than 25%. In mid-2016, we indicated that Chinese smelting capacity stood at about 1.9Mtpy with Yichuan and Guiyang/Sichuan leading the way with 1.1Mtpy and 560,000tpy respectively. Additional pressure from the Chinese government to curb pollution leads most traders to believe that many plants are permanently closed meaning that BFA furnace capacity has dwindled significantly. If this is the case, capacity utilization of what remains of the 1.9Mtpy is probably much higher than 20-25%.

However, although there is increased demand for BFA while furnace plants were being shutdown, most experts expect BFA prices to be stable for the rest of 2017 and stable or flat into 2018.

Silicon Carbide & More is a newsletter dedicated to bringing you the latest supply and pricing information for the silicon carbide and fused alumina industries, plus special industry reports, 6 to 10 times a year.� In addition, Silicon Carbide & More focuses attention on many other products including bauxite, pig iron, ferroalloys, garnet, graphite, coke, magnesium, amongst others.