Trades in Silicon Metal Market were Subdued amid the Tug-of-War Between Upstream and Downstream

SHANGHAI, Oct 21 (SMM) - Trades in the silicon metal market were subdued this week amid flat prices. As of October 21, prices of standard 553# silicon metal in east China rose 50 yuan/mt on a weekly basis to 20,200-20,400 yuan/mt, while those of above-standard 553# silicon metal stood at 21,200-21,500 yuan/mt, flat from the previous week. The prices of #421 (for use in silicone) and #3303 silicon metal both remained stable at 21,900-22,200 yuan/mt and 22,000-22,200 yuan/mt respectively. The silicon metal prices were stable this week after a slight increase last week, and both orders and trades were slack. On the supply side, the electricity price hikes are expected in Sichuan and Yunnan as the dry season draws near. The tight supply of clean coal in Xinjiang due to pandemic control has resulted in the suspension of some RKEFs, thus the plants held their offers firm. On the demand side, the demand for silicone and aluminium alloy was poor, and grinding plants saw few orders released. As a result, downstream enterprises stood increasingly wait-and-see.

The operating rates of primary and secondary aluminium alloy plants remained stable. Some enterprises, who reported a decline in new orders, were slightly bearish on the downstream market. Therefore, they mainly digested the in-plant silicon metal inventory and purchased such auxiliary materials in small amount and on rigid demand. The operating rates of silicone enterprises continued to stay low. Although many monomer enterprises were under maintenance recently, the DMC prices hardly improved due to supply surplus in the short term. The poor profits continued to suppress the demand for 421# silicon metal. No new bids have been released from polysilicon enterprises this week, but as the increasing new capacity ramped up, the demand for silicon metal continued to be strong.

Sichuan will enter the dry season on October 25, when the electricity price is estimated to rise by 0.09-0.1 yuan/kWh. The electricity price hikes will also take place in Yunnan. Moreover, due to the tight power supply, enterprises in Yunnan might face another round of power rationing and production restriction in November. This, coupled with the pandemic in Xinjiang, suggests a possible reduction in supply and could alleviate the bearish impact of sluggish downstream demand. It is expected that silicon metal prices will remain stable next week.