[minutes of the meeting] the expectation of price decline of metal silicon during the high water season may be violated.

SMM5 March 10: in the online live conference hosted by SMM, SMM analyst Yang Xiaoting delivered a keynote speech on the expected decline in silicon metal prices during the high water season. The meeting mainly shared with you the forecast of China's metal silicon supply during the southwest high water period, the progress of new domestic downstream production capacity, the overseas consumption of metal silicon and Q2-Q3 's metal silicon price outlook, and introduced the SMM silicon price method.

Forecast of Metal Silicon supply in China during the High Water season in Southwest China

Xinjiang starts construction to a record high electricity price to curb the release of production capacity in Yunnan

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Contribution of load increase of large factories in Xinjiang to the increment of metal silicon supply in China in 2021

Production in Xinjiang, the largest supplier, continued to be high year-on-year, reaching an all-time high of 360000 tons in the first quarter of 2021, an increase of more than 120000 tons year-on-year, mainly due to the increase in the load of large factories. The recovery of ore supply and the recovery of production capacity after the accident jointly promoted the maintenance of the high operating rate of silicon enterprises in Xinjiang, and the start-up in Xinjiang reached an all-time high. On the other hand, the output of low-grade silicon increases and the supply changes from tight balance to surplus due to the increase in the production of large factories and the decline of the quality of small factories.

The second largest producing area, Yunnan, during the flood season, electricity prices are high and production costs are significantly higher than the same period last year or restrain the release of capacity.

Under the influence of electricity price adjustment, epidemic situation and other factors, the resumption time of Yunnan silicon plant is uncertain. Due to the electricity price has not been settled, the opening time of Yunnan Nujiang silicon plant has been postponed from early March to May. However, there are many uncertain factors for silicon plants in Dehong and other places in Yunnan due to the influence of Ruili epidemic. At this stage, under the support of low supply and cost, most silicon factories are not willing to sell any more, and the delivery price of some specifications in Kunming is even higher than the price from the lower reaches of the north to the factory. It is expected that the price of metallurgical grade high-grade silicon will stabilize. At present, the operating rate of the Yunnan silicon plant is low, the opening time of the Nujiang River has been pushed again and again, and the supply of production reduction has been reduced in Baoshan area. in addition, the inventory of the silicon plant that stopped production before has been basically digested, resulting in a shortage of 330 silicon and 44 silicon supply. The superposition of recent domestic and foreign downstream bidding is more concentrated and exuberant demand and other factors, resulting in 330 silicon in Yunnan, especially the output of not much 44 silicon shortage is relatively serious.

The social inventory of metal silicon shows a decentralized trend.

Huangpu Port: traders reduce port inventory in order to reduce costs and transaction risks, and some export goods are pulled directly into the wharf without transshipment through the warehouse.

Kunming: the proportion of factory-to-factory and factory-to-terminal shipments in Yunnan market has increased significantly, and the increase in transport capacity in western Yunnan, the main producing area, weakens the transit attribute of Kunming warehouse.

Tianjin Port: inventories shrank year-on-year in 2020 due to supply cuts in Xinjiang and US sanctions on goods in Xinjiang.

Progress of new production capacity in the lower reaches of China and overseas consumption of metal silicon

Silicone consumption weakens DMC prices decline polysilicon supply shortage maintains a strong rise

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DMC: benefits from the substantial increase in organosilicon terminal consumption, and the internal and external demand for polysiloxane maintains a good upward momentum. However, short-term consumption weakens seasonally and DMC prices are under pressure. Q3 prices are expected to return to high levels and may continue to run high in 2021.

Polysilicon: although the cost pressure of solar modules and batteries is high at present, due to the profits of direct downstream wafers and rich production capacity, the shortage of polysilicon will be maintained, so the price is expected to continue to set an all-time high.

Silicone monomer new large-scale stock expansion and new players will release more polysilicon capacity. Under the guidance of the "carbon neutralization" policy, polysilicon has also re-entered a period of rapid capacity expansion.

According to SMM statistics, the new construction and expansion of production capacity of relevant enterprises are as follows:

South Korea, Malaysia, Germany, the United Kingdom and other countries downstream due to losses and equipment aging and other reasons gradually withdraw from the market, metal silicon overseas consumption decreased accordingly. Domestic organic silicon, polysilicon and other downstream capacity expansion to replace overseas production capacity, but high sea freight fell but transport capacity is still tight. Considering production costs, transportation distance, export requirements, political and trade barriers and other factors, the southwest, especially Yunnan, is still an irreplaceable source of export supply.

Price Prospect of Q2-Q3 Metal Silicon

The influence of seasonal supply difference on price weakens and pays attention to local electricity price and industrial policy.

The status of Xinjiang metal silicon production as the first in the country is difficult to change: although the new production capacity in Xinjiang Autonomous region is limited, there is still room for Xinjiang production to increase by increasing the load through the stock capacity and putting into production without established targets.

The formation of regional independent market: Xinjiang, Yunnan, Sichuan and other regions gradually form relatively independent markets due to downstream capacity expansion, and some brands will not be sold outside the province until they meet local needs.

The advantage of rising electricity prices in southwest China weakens the upward average cost of the industry during the flood season.

"Click to view the spot historical price of metal.

Falling prices in the high water season and rising prices in the dry season have become old news.

Xinjiang increases production, oxygenation, low-grade silicon supply loose metal silicon price gap between high and low grade

The market price gap between the north and the south widens and cross-regional consumption increases.

Rising production costs and downstream production expansion support the high price of metal silicon to maintain the room for Q3 storage price increase in the flood season.

Introduction of SMM Silicon Price method

The SMM silicon price represents the representative price level that can be traded in the market. In the absence of the above trading information, the SMM silicon price represents the price level that is most likely to close on the day. The quotation is suspended for holidays.

The price of SMM silicon is based on the extensive collection of market information, with the prices of mainstream enterprises as the main reference. These sources of information include producers, consumers, traders and relevant third parties.

SMM has a rigorous pricing process, which is reflected in every process from collection, analysis, pricing, release, to archiving, review and evaluation. And SMM regularly understand the market feedback, improve the pricing process and pricing methods.

The price of the day is announced to the market free of charge through Shanghai Nonferrous net Silicon Zone (https://hq.smm.cn/gui) and Palm Nonferrous APP,. Through handheld non-ferrous APP, Wechat, website members, paid push to the market or access to history.

For more information, please contact SMM Silicon analyst

Yang Xiaoting T: + 86-21-51666895 M: + 86152-1662-8594 E: aliciayang@smm.cn No. 21, Lane 91, Eshan Road, Pudong New area, Shanghai 9 / F, South District, Building 9, Lujiazui Software Park Shanghai | 200127 | China. Www.smm.cn Www.metal.com