(Yicai Global) June 10 -- Hoshine Silicon Industry, China’s largest industrial silicon producers, is shutting down part of its production as silicon prices slump to unprofitable levels. Affected by the news, silicon futures prices surged by the exchange-imposed limit yesterday and climbed again today.

The current price of silicon, which is used to make the semiconductor raw material polysilicon, is so low that Hoshine Silicon is halting operations on the part of its production capacity that uses purchased electricity, which accounts for 30 percent of its production costs in some factories, and will start equipment maintenance instead, Shanghai Securities News reported, citing a person in charge.

Affected by the news, silicon futures rebounded sharply yesterday, after plunging 33 percent in the first six months to CNY12,000 (USD1,672) per ton. The price of the main industrial silicon contract soared 9 percent yesterday and over 5 percent today.

“We plan to start a series of furnace shutdowns beginning this week to decrease output by about 1,000 tons per day. Later, the Ningbo, eastern Zhejiang province-based firm will adjust arrangements according to market demand and electricity costs,” the person said.

Producing one ton of silicon is estimated to consume between 11,000 kilowatt hours and 14,000 kWh of electricity. In 2021, electricity accounted for 35 percent of the production costs of the country’s silicon industry.

Hoshine Silicon produced 1.2 million tons of industrial silicon last year and 1.3 million tons of organic silicon. Most of its silicon production is in western Xinjiang Uyghur Autonomous Region, which has abundant raw materials, energy resources and low prices. The report did not specify which factories would be affected.

Silicon prices are expected to stop falling and should stabilize in the short term, industry insiders said.

Editor: Kim Taylor