Supply Chain Shocks
The ongoing power shortage in China is increasingly affecting global raw material and product supply chains. For example, the government of Shanxi recently told 30 magnesium smelting companies in the province to pause their business for the rest of this year, and then the price of magnesium jumped from US$3,000 or so to over US$8,200 per ton.
Semiconductor manufacturers are being affected by the prices of yellow (white) phosphorus, tungsten and silicon in particular, each of which is essential in semiconductor manufacturing processes. According to the United States Geological Survey, China accounted for 82.1 percent, 67.5 percent and 40.3 percent of the global tungsten, silicon and yellow phosphorus production last year, respectively. In addition, China’s current share in the global magnesium market amounts to 90 percent.
These days, China is increasingly controlling the production of such materials for the power shortage and its control is leading to supply chain shocks. For instance, the price of tungsten carbide rose 37 percent to US$40.25 per kilogram from Oct. 1 last year to Oct. 1 this year, the price of silicon has surged 322 percent since July this year, and that of yellow phosphorus has soared 208 percent in that period.
Under the circumstances, South Korean battery manufacturers are trying to procure more materials from Australia, Chile, etc. In this industry, China’s market share amounts to 65.3 percent in the electrolyte segment, 51.6 percent in separator, 70.9 percent in negative electrode material, 56 percent in positive electrode material, and 41 percent in copper foil whereas South Korea’s shares are 10 percent or so.
Samsung Electro-Mechanics’ plant in Tianjin and LG Display’s plant in Guangzhou are facing intermittent power supply and Winia Electronics’ consumer electronics plant in Tianjin is operating only at night as told by the local government. Samsung Electronics’ semiconductor plant in Xi'an and that of SK Hynix in Wuxi are operating as usual but may be affected by subcontractors’ production setbacks.
The South Korean government, in the meantime, decided to reopen the Sangdong Mine in Yeongwol, Gangwon next year. It was the largest tungsten mine in the world until the 1970s and was closed 27 years ago. The current reserves are estimated at 58 million tons.