Silicon Electrode Prices Continue to Decline, Upstream and Downstream Production Pressures Persist [SMM Analysis]

As the silicon metal market remains weak, the entire silicon industry chain is under pressure. Most silicon companies have already entered a loss-making production state, and some small silicon companies have gradually chosen to reduce production and shut down furnaces after July. Upstream raw material prices are also suppressed due to the impact of downstream market conditions, continuing to weaken.

The price of ordinary power electrodes for silicon remained relatively stable in H1. After a rapid decline in prices in 2023, there was a relatively stable price period in Q1 2024. However, as the downstream silicon metal prices rapidly declined, the acceptance of raw material prices weakened, leading to a decline in graphite electrode prices starting in Q2 2024. Due to severe market competition for carbon electrodes in 2023, prices had already fallen to low levels by Q4 2023, leaving limited room for price decline in H1 2024.

Starting in H2, silicon metal prices began to decline rapidly again. Although silicon companies in south-west China resumed production on schedule during the rainy season, the demand side could not balance the rapid decline in silicon prices, causing a significant impact on upstream electrode prices. Graphite and carbon electrode prices entered a downward trend again. Currently, the prices of ordinary power carbon electrodes and graphite electrodes have hit new lows for the year. The price of carbon electrodes (diameter 960-1100mm) has dropped by 2,700 yuan/mt YoY, a decline of 26%. Meanwhile, the price of graphite electrodes (diameter 960-1100mm) has dropped by 3,250 yuan/mt YoY, also a decline of over 20%. Although raw material costs have continued to decline recently, the long production cycle of electrodes means that high-priced raw materials from earlier periods have not yet been fully consumed, resulting in significant production pressure compared to current prices.

However, despite the continuous weakening of raw material prices for silicon metal, the significant production pressure faced by downstream silicon metal manufacturers has not eased noticeably. In the face of ultra-low silicon prices, some manufacturers, to reduce losses, prefer to purchase lower-priced raw materials and have relaxed their quality standards. This weak demand for raw materials further intensifies the competitive behavior among raw material suppliers, and the production pressures upstream and downstream will persist.