Silica sand export suddenly stopped companies caught by surprise, a large number of foreign-related contracts could not be implemented, and silicon chemical development faced “shock”

The Ministry of Commerce recently announced that silica sand has been added to the fourth batch of goods restricted from export, with the policy set to take effect on May 1, 2006. The sudden nature of the announcement caught many companies unprepared, leading to a wave of contract breaches and significant disruptions in international trade. This move came as a shock to the nascent silicon chemical industry, which had just begun to gain momentum. Fujian and Guangdong are the main producers of silica sand in China, with Fujian accounting for about 65% of the country's total exports. Silica sand is a critical raw material for many silicon chemical companies, but due to the late start of domestic development, these companies have limited processing capacity and few downstream products. As a result, they heavily relied on exporting silica sand to sustain their operations. The abrupt export ban has left them in a dire situation, with some comparing it to being forced to operate on minimum wage. Industry experts estimate that Fujian alone could suffer losses of up to 3 billion yuan. On April 13, the CEO of a major silica sand company in Fujian expressed deep concern to reporters. He revealed that several key export contracts with companies in South Korea, Japan, and Taiwan were now at risk of being broken. Ports, transportation, and staff involved in silica sand exports may also be affected. A long-term supply agreement with a company in Busan, South Korea, is expected to be suspended, causing production delays. The South Korean company has already sent urgent messages and dispatched representatives to negotiate with Chinese authorities. Taiwanese firms, long-time buyers of Fujian silica sand, are also seeking government intervention. Meanwhile, a joint venture in Fuzhou, which produces silica sand in partnership with foreign companies, voiced its concerns: the sudden policy change could push foreign clients into bankruptcy, leaving the company with nearly $5 million in unpaid debts and potentially forcing it to shut down. Industry analysts suggest that the export ban is aimed at preserving China’s natural resources. However, this decision has created severe challenges for the fragile silicon chemical sector, which had built its early success on exporting silica sand. It not only impacts overseas customers and those in Hong Kong, Macao, and Taiwan, but also threatens the sustainability of domestic companies. Experts urge the relevant departments to engage directly with businesses and provide support to help them navigate this crisis.

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