The United States remains painfully dependent on China for silicon and solar panels

By AGMetalminer.com

The Renewables MMI (Monthly Metals Index) continued its slight downward trend on a monthly basis, falling by 3.8%. The index’s two main components, silicon and cobalt prices, continue to decline due to persistent renewable energy supply bottlenecks from 2023. This, combined with falling grain-oriented electrical steel prices, has driven the index lower

Silicon in solar panels: geopolitical imbalance?

The United States relies heavily on China for solar panel supplies. However, this dependence on Chinese production raises several concerns. Attention should be paid to the alleged use of forced labor in China’s Xinjiang region, which produces much of the world’s polysilicon, the main ingredient used in solar panels.

Due to evidence of forced labor abuses against Uyghurs and other Muslim minorities, the U.S. government has imposed restrictions on imports of products made in Xinjiang. However, as companies struggle to obtain the required documentation that their products do not involve forced labor, shipments of solar panels from China continue to be delayed and confiscated.

Another major cause for concern are the threats to the global supply chain resulting from China’s dominance in solar panel production. For example, 14% of the world’s polysilicon comes from a single plant in China, and disruptions at these plants could impact the entire global sector.

There are also many environmental concerns due to the over-reliance on Chinese manufacturing. The main source of electricity used in China’s polysilicon production is coal-fired energy, which increases the carbon footprint of solar panels. That said, it is possible to reduce these overall emissions by moving production to areas with cleaner energy sources.

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Solving these problems

Initiatives are underway to support domestic production of solar panels in the United States to overcome these problems. However, domestic demand continues to grow faster than production capacity, meaning imports will have to continue for now.

China is the world’s largest producer of solar panels, lowering prices and improving availability. However, the United States’ dependence on Chinese imports raises questions about forced labor, weak supply chains and environmental impacts.

Grain oriented electric steel/GOES MMI

The MMI Grain Oriented Electrical Steel Index took another nosedive in price action, falling 28.89% to $3,399 per metric ton.

Tornadoes destroy transformers, exasperating constant transformer shortages

The U.S. electrical system suffered severe damage from the recent wave of tornadoes that tore through the country, destroying many transformer systems. This comes at a time when the country is already struggling with a severe shortage of transformers, making it extremely difficult to replace damaged equipment.

Transformers, the main component of the electrical grid, convert high-voltage electricity from power plants into lower voltages suitable for use in homes and businesses. However, a large number of these transformers are reaching the end of their service life.

By some estimates, 70% of transformer units in the U.S. are at least 25 years old, and 15% are over 40 years old. Meanwhile, the transformer shortage worsened as catastrophic weather events such as tornadoes depleted transformer supplies, forcing utilities to scramble to find replacements.

Overcoming the transformer dilemma

To overcome this conundrum, experts recommend developing a thorough resilience plan that emphasizes strengthening the power sector as a whole and better lifecycle management. This may involve the use of state-of-the-art emergency replacement capacity management techniques, such as the Standby Transformer Equipment Program (STEP), which aims to create a strategic reserve of transformers that utilities can use in an emergency.

Additionally, to reduce energy waste and carbon dioxide emissions by 340 million tons over the next 30 years, the Department of Energy recently suggested increasing the use of amorphous steel, a more efficient material for transformer cores. Estimates say this could save consumers an estimated $15 billion on energy bills.

However, several lawmakers and industry experts fear that switching to a new type of transformer will worsen existing supply chain problems and make it more difficult to develop and maintain the grid.

MMI Renewable Energy: Notable Price Changes

See why technical analysis is a better forecasting methodology than fundamental analysis and why it matters for metals purchasing.

• Silicon prices fell 3.24% to $1,836.07 per tonne
• Cobalt prices fell 5.2% to $26.89 per kilogram
• Neodymium prices rose 7.67% to $64,639.74 per metric tonne
• Finally, steel plate prices moved sideways, rising a slight 1.47%. This pushed prices up to $1,310 per short ton

By the Metalminer team

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