LONDON, July 18, 2017 /PRNewswire/ --
Roskill released its new silicon and ferrosilicon market report with forecasts out to 2026 in July. It is essential reading for anyone needing a comprehensive overview of these markets.
Silicon metal consumption growth has accelerated since the global financial crisis
Global consumption of silicon metal has increased strongly in recent years, reaching 2.8Mt in 2016. Between 2000 and 2010, global consumption grew at an average rate of 5.4%py and from 2010 to 2016, the average growth rate increased slightly to 5.8%py. Silicon metal, therefore, is somewhat unusual amongst metals, in that its consumption growth has accelerated, rather than slowed, since the global financial crisis.
The strong growth in consumption is reflective of the fact that all of the three largest end-use applications for silicon metal (aluminium alloys, silicones and polysilicon in solar applications) have experienced strong demand growth in recent years.
Aluminium remains the largest end-use for silicon metal, accounting for roughly half of total consumption in 2016. Roskill expects silicon metal demand from the aluminium sector to grow quite strongly, at an average annual rate of 3.4%py between 2016 and 2026. This will be underpinned by anticipated growth in aluminium demand from the automotive sector.
Silicones are the second-largest end-use sector for silicon metal, representing roughly 30% of global consumption in 2016. There are estimated to be 10,000 individual applications for silicones. Many of these are in sectors which are chiefly driven by consumer spending and disposable income. As a consequence, the markets for silicone products remain mature economies such as North America, Western Europe and Japan although developing economies will drive future demand.
Polysilicon used in solar applications accounted for 17% of silicon metal consumption in 2016. The solar sector has experienced by far the fastest consumption growth of any market for silicon metal over the past decade and this is expected to remain the case. The solar industry remains volatile but has transitioned from the stage where growth was largely dependent on government incentives and subsidies to a situation where a significant proportion of new solar installations are being financed wholly by private sector investment. There has also been a major geographical shift; Asia accounted for only a small proportion of new solar installations a decade ago, whilst it now accounts for the overwhelming majority.
Ferrosilicon consumption has, however, shown a declining trend
While silicon metal consumption growth has been rather positive since the global financial crisis, the same cannot be said for ferrosilicon demand growth. Global consumption peaked in 2011, and has since followed a declining trend, with the drop being especially steep between 2014 and 2016 by which point world consumption was 6.5Mt on a 75% silicon content basis. Declines are reflective of falling use of ferrosilicon per tonne of crude steel in China, and the reduction in crude steel output in industrialised regions such as Europe, the USA and Japan since the global financial crisis. Roskill forecasts that world ferrosilicon consumption will recover somewhat, but with an anticipated growth rate of only 1%py to 2026, global consumption will remain below the peak reached in 2011.
Ferrosilicon is primarily consumed in three applications: steel, iron castings and magnesium. Steel remains overwhelmingly the largest end-user of ferrosilicon. Steel's share of world ferrosilicon consumption peaked at 77% in 2009 but declined to 69% by 2016. This was underpinned by a decline in ferrosilicon consumption in carbon and alloy steels. Roskill expects steels to maintain their market share for ferrosilicon consumption over the period to 2026.
Iron castings remain the second-largest end-use for ferrosilicon representing roughly 17% of total consumption in 2016. World cast iron consumption has consistently grown at a slower rate than steel over the past two decades, primarily because of the use of alternative materials. This is a long-term trend, which has developed over a number of decades, especially in the automotive industry, and that will continue and perhaps even accelerate over the next decade. It is expected that this trend will continue, and perhaps even accelerate over the next decade. This will continue to result in low growth rates for ferrosilicon consumption in cast iron, though it will be beneficial for silicon metal consumption in aluminium applications as one of iron's competitors.
Magnesium is the third significant end-use sector for ferrosilicon, representing 13% of global ferrosilicon consumption in 2016. Magnesium's share of world ferrosilicon consumption has consistently increased over the past two decades; in 2000 it was only 5%. Almost all of the ferrosilicon used in magnesium production is consumed in China, where magnesium output increased more than fivefold between 2000 and 2016. Roskill expects consumption of ferrosilicon in magnesium will grow at a modest rate between 2016 and 2026, although somewhat below the anticipated growth rate of magnesium consumption.
Overcapacity remains in both markets
Though global ferrosilicon production remains more than double that of silicon metal, the gap has narrowed substantially in recent years, as silicon metal output has grown strongly whilst production of ferrosilicon has declined. The gap is much narrower still in terms of value, given that prices for silicon metal are far higher than those for ferrosilicon.
World silicon metal production in 2016 was estimated at 2.7Mt. This was unchanged from 2015, though the stable total obscures various increases and decreases in production at the country level. China remains the dominant force in the market; accounting for around 75% of global capacity and 65% of world production. Seven out of the top 10 global producers are Chinese-owned.
Global silicon metal capacity utilisation is estimated at 51% in 2016. This is a marginal increase compared with recent years but utilisation remains very low. This primarily reflects the overcapacity and low utilisation rate which characterises the Chinese silicon metal industry.
World ferrosilicon production in 2016 was estimated at 6.4Mt. Following demand trends, output peaked in 2011 and has since followed a declining trend. China currently dominates world output of ferrosilicon to a similar extent than is the case with silicon metal. However, whilst China's share of world silicon metal output has risen since the global economic crisis, its share of global ferrosilicon output has fallen markedly over the same period. From a peak of 74% in 2009, China's share of world ferrosilicon fell to 66% in 2016.
Ferrosilicon utilisation in 2016 has fallen to 47%. This is a marked decrease compared to several years earlier, when world capacity utilisation was comfortably above 50%. Despite strong Chinese government action to reduce overcapacity, capacity utilisation in ferrosilicon has declined in China as output has fallen faster than capacity has been cut.
Silicon and Ferrosilicon: Global Industry Markets and Outlook to 2026, 13th Edition is available to buy from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL UK soon. Click here to download the brochure.
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SOURCE Roskill Information Services