Silicon Prices Fell Due to the Weak Fundamentals

SHANGHAI, Nov 18 (SMM) - Silicon metal prices of all specifications posted a downward trend this week. As of November 18, prices of standard #553 silicon in east China fell 300 yuan/mt or 2% on a weekly basis to 19,200-19,500 yuan/mt; above-standard #553 slicon dropped 350 yuan/mt or 2% to 20,400-20,600 yuan/mt; #421 silicon dropped 450 yuan/mt or 2% to 21,300-21,500 yuan/mt; #3303 silicon dropped 600 yuan/mt or 3% to 21,100-21,300 yuan/mt. Generally speaking, both domestic and overseas silicon metal markets were quiet, and particularly the domestic market saw weak supply and demand. On the supply side, the pandemic in Xinjiang still disrupted the production of local silicon companies, while the approaching dry season in Sichuan and Yunnan resulted in expectations for rising costs and production cuts. On the demand side, silicone and aluminium alloy plants were under great pressure in face of meagre profits. No new orders have been released from polysilicon enterprises, and grinding plants also hesitated to place orders as they have stocked up earlier. The trades in the silicon metal market kept falling, and the traded prices also declined as major silicon metal plants in north China cut their offers on the news of relaxed pandemic control measures. As for the overseas market, the export orders were slack in that overseas customers strongly bargained down the prices and the RMB has appreciated against the US dollar.

The average operating rate of aluminium alloy producers was basically flat from the previous week. The aluminium alloy prices failed to follow the price hike of aluminium because some aluminium alloy producers, who were on the brink of loss, mainly purchased silicon metal on rigid demand. The average operating rate of silicone enterprises was basically stable over the previous week. Some orders for 421# silicon metal were released this week. The DMC prices stood at 17,200-18,200 yuan/mt amid weak supply and demand of silicone. Although the prices of 421# silicon metal dropped, the prices of methyl chloride, another raw material, were on the rise. Altogether, the production costs remained high and the profitability of silicone enterprises has not improved significantly. The output of polysilicon sustained a steady growth as polysilicon enterprises continued to ramp up the capacity, which posted a robust and enduring demand for silicon metal. The silicon metal prices are forecast to drop next week amid bearish market sentiment.