Elkem’s Ferro-Silicon Production Set to Drop Amid Weak 4Q Sales

Elkem

Elkem reduces production after weak sales and muted demand for silicon and ferro-silicon products.

Norwegian silicon and ferro-alloy producer Elkem is set to cut back its ferro-silicon production in the first quarter of 2025. This decision follows a significant drop in silicon product sales during the fourth quarter of 2024. Elkem’s operations have been under pressure due to weaker demand and lower prices, particularly in the ferro-silicon and silicon markets.

Production Challenges and Maintenance Disruptions

The reduction in production is largely driven by scheduled maintenance at Elkem’s Norwegian facilities and power constraints at its Iceland-based Hvalfjordur plant. These issues have already led to a 30% decrease in production at the Hvalfjordur plant since January. The plant, which has a production capacity of 120,000 tonnes per year, will likely see continued production constraints in the first quarter.

Decline in Sales and Weak Market Conditions

Elkem’s silicon products division, which includes silicon metal and ferro-silicon, saw a 19% decrease in sales during the fourth quarter of 2024, reaching 98,000 tonnes. This decline was a reflection of weak market conditions, with demand for silicon and ferro-silicon remaining subdued. Furthermore, prices in China hit new lows due to oversupply and a downturn in the polysilicon market. Although prices in Europe remained more stable, they were still relatively low throughout the quarter.

Financial Performance and Strategic Adjustments

Despite the challenges in its silicon products division, Elkem saw a significant improvement in its overall earnings before interest, taxes, depreciation, and amortisation (EBITDA), which totaled 1.16 billion kroner ($102.85 million) for Q4 2024. This represents a marked increase from the previous year’s 632 million kroner, driven by operational improvements and a successful capex reduction program. However, the EBITDA for the silicon products division fell by 24%, marking a 13.3% decrease in full-year 2024 EBITDA compared to 2023.

In light of these challenges, Elkem is considering divesting its silicones division. This move would allow the company to focus on expanding its silicon products and carbon solutions divisions, aiming for more robust growth in these areas.

Conclusion

Elkem’s decision to reduce ferro-silicon production is a direct response to weak demand and operational issues in early 2025. The company’s strategic adjustments, including a potential divestment of its silicones division, aim to position it for future growth in the silicon and carbon solutions markets, which could be key to sustaining long-term profitability.