The third quarter will be cyclical low for silicon metal, forecasts J.P. Morgan Securities in a note to clients on Tuesday, which sees demand about to perk up from solid second-half growth in U.S. and world industrial production. The silicon mineral is known in the ferroalloy and chemical industries as "silicon metal" and is used by the aluminum, steel, solar energy and semiconductor industries.
The J.P. Morgan forecast sees global silicon demand increasing 15% in 2010 to 1.8 million tons, back to 2008 levels after a 13% decline in 2009. "At the same time, production of silicon should respond to increased demand in 2010 and grow 13% to 1.9 million tons," writes analyst Michael Gambardella.
Upshot: The analyst expects silicon industry spot prices to average $1.25/lb in 2009 (vs. a year-to-date price of $1.27) and then rise to $1.35 in 2010 and $1.40 in 2011.
Silicon metal is the necessary precursor to polysilicon, which is used in the production of photovoltaic solar cells for power generation as well as semiconductors. "Some industry experts estimate that the solar industry could increase its annual power generation from about 6,000 megawatt hours (MWh) today to over 100,000 MWh by 2025," writes Gambardella." This would require about 850,000 tons of polysilicon to make the necessary solar cells. To produce one ton of polysilicon requires 1.4 tons of silicon metal. This would imply that an additional 1.2 million tons/year of silicon metal will be needed in an industry that currently has a global capacity of 1.8 million tons now.
Source: Purchasing.com
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