Production cut benefits materialize as futures and spot trends diverge; silicon metal prices remain in a stalemate [SMM Silicon Industry Weekly Review]

SMM, September 3: Silicon metal: This week, spot silicon metal prices consolidated on a strong note. As of September 3, SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, up 50 yuan/mt WoW, #441 silicon was at 9,500-9,700 yuan/mt, up 50 yuan/mt WoW, and #3303 silicon was at 10,100-10,300 yuan/mt, up 50 yuan/mt WoW. In the futures market, the SI2611 contract moved sideways in the 8,650-8,865 yuan/mt range this week, shot up to 8,865 yuan/mt early in the week before pulling back, and closed at 8,735 yuan/mt in late Thursday trading, down 70 yuan/mt WoW. In terms of market quotes and transactions, after production cuts at large plants in Xinjiang were implemented, silicon enterprises showed stronger willingness to hold prices firm, low-priced cargoes in the market decreased, silicon enterprises quoted firmly, and some suppliers slightly raised their quotes. Affected by long positions taking profit and exiting, as well as macro sentiment, silicon metal futures prices pulled back weakly, wait-and-see sentiment in the market intensified, market transactions remained need-based, and the price center consolidated at highs.

On the demand side, polysilicon enterprises' weekly production schedules were generally stable. As some polysilicon enterprises raised their operating loads, September polysilicon production is expected to increase MoM from August, meaning September polysilicon demand for silicon metal will increase MoM from August. Silicone enterprises' weekly operating rate remained around 60%. During the traditional peak season, downstream demand for silicone edged up, and demand support is expected to keep September silicon metal consumption from the silicone sector basically flat MoM. Aluminum-silicon alloy enterprises' operating rates were basically stable. As the high-temperature season ends and the "September-October peak season" approaches, end-use demand has expectations for marginal improvement, but the improvement is expected to be mild, and downstream purchases remain mainly need-based orders.

On the supply side, SMM data showed China's August silicon metal production at 356,300 mt, down 8.2% MoM and down 7.6% YoY. In September, operating rates among different silicon enterprises will see both increases and decreases. At end-August, production cuts at large plants in Xinjiang were implemented, while a small number of silicon enterprises in Inner Mongolia and Ningxia have expectations for production increases. Overall, the reduction is larger, and September silicon metal production is expected to continue its downtrend. On the cost side, silicon coal prices in Gansu, Ningxia, and Shaanxi recently rose by varying degrees, strengthening cost support for silicon metal production. Overall, in September, silicon metal supply will decrease while demand increases, the theoretical balance will shift to destocking, and fundamentals have indeed improved. Combined with rising prices of raw materials such as silicon coal, silicon metal prices have relatively strong support below, while upside needs to be verified by the scale of subsequent silicon metal growth. In the short term, silicon metal prices are expected to consolidate at highs. Going forward, attention should be paid to the realization of supply-side increases and decreases, as well as silicon enterprises' willingness and pace of shipments.

Polysilicon: This week, the polysilicon price index stood at 40.72 yuan/kg, with N-type recharging polysilicon quoted at 38.8-42.5 yuan/kg and granular polysilicon at 39-40 yuan/kg. Market quotations were broadly stable this week, with no large-volume deals concluded and relevant meetings still underway. This week, inspections entered Inner Mongolia, Xinjiang, and other regions. On Saturday, another self-organized meeting took place, further fueling a wait-and-see sentiment in the market. Currently, top-tier players' quotations remain costly for downstream acceptance, downstream sentiment is weak, and overall trading activity is subdued.

Wafer: This week, wafer prices continued to edge down. N-type 183 wafers were priced at 1.089-1.114 yuan/piece, 210R wafers at 1.096-1.119 yuan/piece, and 210mm wafers at 1.174-1.232 yuan/piece. Cost side, upstream polysilicon prices remained relatively firm, providing some support to wafer prices but with limited strength. Supply side, wafer production in September edged up MoM, with output still exceeding downstream demand, keeping supply pressure in place. Some traders were eager to offload previously stockpiled inventory, further intensifying downward price pressure. Demand side, the Chinese market remained persistently weak. Although stockpiling in India and re-export demand lent some support to the export market, they were insufficient to fully offset the negative impact of weak domestic demand. Wafer prices are expected to continue drifting lower in the near term.

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