LME WEEK 2021: Silicon shortage forces change in 2022 supply contract structure

Aluminium producers are now considering different contract structures for value-added products with alloying elements such as silicon to mitigate upside production cost risks.

They, along with traders and consumers, have noted in recent weeks that contracts for long-term supply of products such as 7% silicon primary foundry alloy (PFA) will include various mechanisms to protect producers and traders selling the product from surging silicon costs.
An energy shortage in China propelled Fastmarkets' price assessment for silicon export 98.5% Si min, fob China to $9,000-10,000 per tonne October 1. This is 150% higher than the start of September.
Rising production costs have been a major driver pushing up premiums for the product.
Fastmarkets assessed the aluminium primary foundry alloy, silicon 7 ingot premium, ddp Germany at $550-620 per tonne on September 10, up by $40-70 per tonne compared with $510-550 per tonne on August 13. The latest assessment is a new high.

Fastmarkets also assessed the monthly aluminium primary foundry alloy, silicon 7 ingot premium, ddp Eastern Europe at $550-620 per...

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