The recovery of the global economy is so fragile and uneven, especially given the headwinds in financial markets and supply chains. The new threat comes from the commodity market. Experts consider a sharp reduction in silicon production in China to be one of the major factors that may undermine further economic revival.
According to Bloomberg, over the past two months, the shortage of silicone metal has sent its price up by 300%. As a result, the shortage of metallic silicon, sparked by a production cut in China, poses a new risk to the recovery of the global economy.
Notably, silicon metal is used in most industries: in the production of computer chips, solar panels, medical implants, concrete and automotive parts. The worsening situation has forced such chemical manufacturers like Elkem ASA and several other companies to suspend sales. Currently, the market price of the metal remains high.
Since the summer of 2021, the price of polysilicon, which is used for solar panels, has skyrocketed by 400%. Such a sharp increase in price may inflate the cost of panels and tariffs for green energy. At the moment, manufacturers of solar panels are facing increasing costs for the production of renewable sources of energy.
Analysts warn that markets may soon face new problems amid the growing shortage of silicon and the cost of oil, as well as disruptions in the supply chains of a number of goods. The price of silicon ballooned after China decided to cut the metal production by 90% compared to August. Previously, the cost of metal ranged between about 8,000 and 17,000 yuan ($1,200 - $2,600) a ton. Now, it has soared to 67,000 yuan ($10,392). China made production cuts after it pledged to reduce harmful emissions under Beijing's new green policy and power outages that negatively affected the production of metals in China.
