SHANGHAI, Apr 7 (SMM) - Silicon metal prices continued to go down this week, and the price drop of chemical-grade silicon metal was especially significant. As of April 7, the prices of standard #553 silicon metal in east China lost 500 yuan/mt from a week earlier to 15,600-16,100 yuan/mt, those of #441 silicon metal dropped 550 yuan/mt to 16,200-16,500 yuan/mt, and those of #3303 silicon metal fell by 350 yuan/mt to 16,900-17,100 yuan/mt. Prices of #421 silicon metal (used in silicone) were 17,500-17,700 yuan/mt, down 200 yuan/mt from a week earlier. The continuous sharp drop in the futures market triggered pessimism among some downstream users over the spot prices, prompting them to push for lower procurement prices. There was a chaos in spot quotes driven by factors such as product quality, futures and spot price arbitrage, and cost differences across silicon factories. Transactions were made as required.
The operating rates of aluminium alloy enterprises remained stable. The current operating rates of major secondary aluminium factories are relatively stable, who mainly produce for existing orders. Operating rates will stabilise in the short term. As downstream consumption of primary aluminium alloys still shows no signs of improvement, the operating rates of leading enterprises are expected to remain stable. Their purchase of silicon metal will be mainly based on demand.
The operating rates of silicone enterprises dropped slightly. The low-end price of DMC fell to 14,800 yuan/mt during the week, and the mainstream transaction prices were 15,300-15,500 yuan/mt. The weekly average price fell by 1,000 yuan/mt from the week prior. SMM expects that in March, the silicone output should be around 173,000 mt, a decrease of 4% month-on-month. The output reduction and shutdown of DMC plants mostly occurred in the second half of March, thus the impact on silicone output will be seen mainly in April.
The operating capacity of polysilicon enterprises continued to increase. Bid solicitation orders of polysilicon powder were delayed due to the low silicon prices. The intermediate grinding and processing enterprises were cautious in purchasing against downstream buyers' pushing for lower prices and falling prices of raw materials. Some grinding enterprises reported low inventory.
On the supply side, based on the current spot prices, the local plants have been already in losses. Considering the current spot price, there is only a slight profit in Xinjiang. Silicon metal prices have been sluggish for a long time and there is no sign of increases, leading to a growing number of loss-making silicon companies that plan to suspend production. Given the absence of end-user consumption improvement and lack of positive factors, silicon metal prices are expected to hover at lows next week.
