PCC Bakki Silicon Reduces Losses in Second Quarter Despite Challenging Market Conditions

PCC Bakki Silicon, Iceland's prominent silicon producer, reported improved sales in the second quarter of this year, compared to both the previous quarter and the same period last year. However, the company continues to grapple with financial losses due to challenging economic conditions in the European Union and increasing competition from Chinese manufacturers. Despite these obstacles, the company managed to reduce its losses through strategic cost improvements.

Sales for the silicon and derivatives segment of the PCC Group, with PCC Bakki Silicon as the main affiliate, reached €22.8 million in the April-June period, a significant increase from €15.5 million in the same period last year and €21.2 million in the first quarter of 2024. For the first half of the year, sales totaled €44 million, remaining largely unchanged compared to the same period in 2023.

Earnings before interest, taxes, depreciation, and amortization (Ebitda) recorded a loss of €6.6 million in the second quarter, showing an improvement from a loss of €11.5 million in the same period last year and €10.3 million in the first quarter.

PCC Bakki Silicon operated two furnaces during the first half of the year, enhancing its cost structure despite a temporary operational limitation in May due to a power shortage imposed by the electricity supplier. The company is focusing on the production of high-purity silicon grades such as 3-3-0-3 and 2-2-0-2, which command higher premiums and face less competition from non-EU producers compared to the more common grades like 5-5-3 and 4-4-1.

Meanwhile, PCC Silicium, a Polish subsidiary within the same silicon and derivatives segment, reported positive operating profits, driven by increased quartzite shipments to Iceland and stronger sales to the ferroalloy industry.

PCC BakkiSilicon sales fall as market slump forces July shutdown

PCC Bakki Silicon

PCC BakkiSilicon sales fall sharply on weak prices and a July production halt. The PCC BakkiSilicon sales fall reflects collapsing European silicon margins amid cheaper Chinese metal. As a result, PCC BakkiSilicon sales fall becomes a test case for EU trade defenses.

Output cuts and shutdown follow collapsing economics

PCC operated at half capacity during the second quarter as prices deteriorated. Therefore, the firm fully suspended production on 20 July to stem losses. Sales fell to €14.8mn in 2Q from €22.8mn a year earlier. Meanwhile, first-half sales dropped 38pc to €27.3mn. The segment’s ebitda loss widened to €9.3mn from €6.6mn.

Policy push centers on EU safeguards and Iceland tariffs

PCC urges EU safeguards on silicon metal to protect local producers. The company also seeks a review of Iceland’s import tariffs. It alleges unfair trade practices by Chinese silicon suppliers. Consequently, management frames policy action as critical to avoid Europe-wide plant closures.

PCC BakkiSilicon sales fall underscores Europe’s silicon supply risk. Moreover, sustained Chinese price pressure threatens regional self-sufficiency. Producers may need relief until demand normalizes and spreads recover.

The Metalnomist Commentary

Europe’s silicon chain is flashing red on price arbitrage and power costs. Unless safeguards and tariff clarity land quickly, deindustrialization risk rises. Watch contract resets into 2026 and any curtailments beyond Iceland for guidance on bottom formation.