From January to February, domestic silicon metal prices showed a "down-stable-down” trajectory. There were inquiries and transactions in silicon metal market after the holidays. Buyers consuming existing stocks and bearish market sentiment kept silicon metal trading tepid since the end of the holidays. Overseas customers also had greater incentive to lower purchase prices. Silicon metal prices dropped, even if silicon metal plants raised prices. These are prices of silicon metal by types as of March 12 and their changes from pre-holiday levels: standard #553 silicon metal (14,100-14,400 yuan/mt, -500 yuan/mt or 3%); above-standard 553# silicon metal (14,700-14,800 yuan/mt, -250 yuan/mt or 2%); 441# silicon metal (15,100-15,400 yuan/mt, -250 yuan/mt or 2%); 421# silicon metal used in silicone (15,400-15,600 yuan/mt, -250 yuan/mt or 2%); 3303# silicon metal (15,100-15,300 yuan/mt, -300 yuan/mt or 2%).
Continued production during the holidays and weaker-than-expected demand after the holidays left some silicon metal plants with piling-up of in-plants stocks, dragging down silicon metal prices. After the holidays, silicon metal power prices nosedived. Overseas orders were also made at low prices. Downstream sectors expected weak silicon metal prices. Supply and demand increased in tandem in March. Despite this, positive factors were not ample enough to warrant steep silicon metal price hike. A focus will be put on what silicon metal plants will react to when silicon metal prices approach the break-even level in northern China.
Supply: According to SMM statistics, China's silicon metal output in February 2024 was 345,000 mt, down 1,000 mt or 0.4% MoM but up 64,000 mt or 22.7% YoY. Judging from the monthly output by province, output was largely stable in most provinces of China. Xinjiang province led with output growth of 5,000 mt due to hiking operating rates of leading plants, while the rest saw output rise by merely 100-1,000 mt.
Demand: Silicon metal consumption from polysilicon sector continued to grow. According to SMM data, domestic polysilicon production in February was 163,000 mt, up 2.58% MoM. Due to a nearly 10% hike in planned silicon wafer output in China, most polysilicon plants maintained normal production during the CNY holidays. This coupled with profit uptick, may bring estimates of 170,000 mt for polysilicon output in March. Silicon metal consumption in DMC sector ticked down in February. According to SMM data, China's DMC production in February was down 6.89% MoM at 178,500 mt due to maintenance of four DMC plants. Cash flow of DMC plants improved after the holidays amid rising market prices, but they still didn’t increase operating rates sharply. Aluminum alloy plants reduced silicon metal consumption in February amid the holiday fallout. Secondary aluminum alloy plants took holidays for 5-15 days, with a few lasting 20 days or more, and leading ones had short or no holidays. Aluminum alloy plants resumed production to pre-holiday levels in March.
Bullish: Growing DMC prices and more demand from polysilicon will boost silicon metal prices.
Bearish: Slow buying and pessimistic market sentiment will make it tough for in-plant and social stocks of silicon metal to dip.
SMM comments: Continued production during the holidays and weaker-than-expected demand after the holidays left some silicon metal plants with piling-up of in-plants stocks, dragging down silicon metal prices. After the holidays, silicon metal power prices nosedived. Overseas orders were also made at low prices. Downstream sectors expected weak silicon metal prices. Supply and demand increased in tandem in March. Despite this, positive factors were not ample enough to warrant steep silicon metal price hike. A focus will be put on what silicon metal plants will react to when silicon metal prices approach the break-even level in northern China.
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