Sunday, June 17, 2012

Construction Update - SiC Furnaces:

With the publication of SiC & More Issue #45 expected next week, watch for an exciting update on the SiC furnace plants being built around the world.

Kormac Kennedy will report on the Silicon Carbide Technologies facility that will soon be under construction in Siberia. An interview with key management reveals both the short and long term plans for the facilities being built in Siberia near the Bratsk Hydroelectric power station.

SiC & More will also provide an update on the first SiC plant ever built in Vietnam.

In addition, an in depth SiC & More interview with top personnel at CUMI brings readers up-to-date on one of the world's most ambitious and exciting plant expansions. The changes taking place at the VAW plant in Russia are proving to be most interesting.

Rumors - as well as plans - regarding other plant expansions and new projects have slowed due to global oversupply of SiC and a significant drop in worldwide prices.

Watch for more in issue #45 of SiC & More.

Monday, April 23, 2012

No Decision

In issue #43 of SiC & More (January 2012) it was reported that the Chinese Ministry of Commerce announced that the silicon carbide (SiC) export license allocation for 2012 would be the same as for 2011. The Ministry also revealed that 70% of the 2012 SiC allocation would be made available during the first six months of the year. As a result, 151,200 m/t of SiC would be available for export during the first half of 2012.

This past week the Ministry was expected to make a decision regarding the second half allocation. Many in SiC industry expect the second half tonnage to be canceled, however, as of early in the business day on April 20, 2012 no decision had been rendered.

Prices on virtually all SiC products have been dropping since late 2011. That trend continued after China's Spring Festival. Many Chinese SiC producers expected prices to recover after the Festival, however, that has not happened. To the contrary, exports have dropped and so have prices.

The price of Chinese export licenses continues to fall and several traders believe the price will go as low as $125 metric ton. In China, demand for SiC metallurgical products has softened and green SiC consumption is off by as much as 50%.

In addition, the price of electricity continues to increase and struggling SiC furnace plants are scaling back or stopping production altogether. One trader told SiC & More that most of the plants in Yinchuan are running at about 45% of capacity. This same trader said that only three or four green SiC furnace plants are operating in Qinghai while half of both the green and black plants in Lanzhou are down.

As a result, SiC & More expects the Ministry to cancel the export license allocation for the second half of 2012. It's uncertain what effect this action will have on pricing, however, one trader said, "The canceling of 30% of the China's 2012 SiC export licenses should firm prices during Q3 and that should carry over into Q4". We will see.

Tuesday, February 21, 2012

World Trade Organization Appeals Panel Ruling and Effect

As most readers know, China appealed the World Trade Organization's (WTO) July 2011 ruling stating that China unfairly protected its domestic manufacturers by limiting the export of nine raw materials including SiC.

On January 30, 2012 the WTO appeals panel ruled that China's export restraints on nine key raw materials were not consistent with its obligations to the organization.

The nine commodities include silicon carbide, bauxite, coking coal, fluorspar, magnesium, manganese, silicon metal, yellow phosphorous, and zinc. Many of the aforementioned commodities are deemed critical to the chemical and metals industries.

According to Karel De Gucht, EU Trade Commissioner, "China now must comply by removing these export restrictions swiftly and furthermore, I expect China to bring its overall export regime - including for rare earths - in line with WTO rules."

However, there is another interesting aspect of the ruling. The appellate body said, " The US, EU, and Mexico had not proved that some export policies, such as export licensing requirements and minimum export prices, broke WTO rules."

Most traders we talk to expect China to completely overhaul their export license policy for SiC. The program of allocating 215,000 metric tons per year for export then auctioning those licenses is expected to be abolished for calendar year 2013. Nevertheless, many traders and processors of SiC also expect a mechanism to be in place by the end of 2012 that will deter a free-fall in prices.

SiC & More expects FOB China prices to drop during Q2 2012 and quite possibly again during Q3. As mentioned in issue #43 of SiC & More, in December 2011 China announced that the export license allocations for 2012 would be the same as for 2011, and that 70% of the 2012 allocations would be made available during the first six months of the year. As a result, 151,200 metric tons of SiC will be available for export during the first half of 2012. If the licenses do not sell as expected during the first half of 2012, the 151,200 m/t could be the only allocations for the entire year meaning that the final 63,800 m/t would not be allocated. Such a possibility seems to have created enough apprehension in the supply chain that it is creating price increase pressure.

Bottom line, don't expect a free-fall in prices as a result of the WTO appeals ruling