Weekly Comment: Silicon Metal Market Remains Weak as Downstream Purchases as Needed

SHANGHAI, Mar 31 (SMM) - Silicon metal prices edged lower this week. As of March 31, the prices of above-standard #553 silicon metal in east China remained at 16,200-16,500 yuan/mt, those of #441 silicon metal were flat between 16,800-17,000 yuan/mt, and those of #3303 silicon metal stabilised at 17,300-17,400 yuan/mt. The prices of #421 silicon metal (for silicone) slumped 450 yuan/mt week-on-week to 17,700-17,900 yuan/mt. The previous steep fall in metallurgical-grade silicon metal prices triggered output cuts across Sichuan and Yunnan. According to SMM survey, as of the end March, only 38 furnaces were still in operation in the province. Silicon metal plants in north China maintained high operating rates. Some silicon metal plants suffered losses or thin profits when silicon metal prices slumped earlier. Yet, thanks to cost support and improving trades that were driven by rigid demand, the decline in metallurgical-grade silicon metal prices slowed down.

On the demand side, the operating rates in aluminium alloy industry were basically stable, with little chance of growing significantly in view of sluggish auto market. Cash flow pressure and abundant silicon metal supply kept aluminium alloy plants restocking only as needed, even as the price difference between aluminium and silicon metal has exceeded 2,000 yuan/mt.

The operating rates of DMC plants fell to about 70% due to output cuts. The mainstream transaction prices of DMC were 15,500-16,000 yuan/mt. Some DMC plants issued bids for silicon metal, and the bid prices are expected to be around 17,600-17,800 yuan/mt (delivery to factory).

Only a few polysilicon producers undertook small-scale maintenance, and the impact was minimal. With the ramp-up of new polysilicon capacity, the demand for silicon metal remained robust. Recently, polysilicon plants began to make inquiries. The prices of Si99% silicon powder continued to fall.

On the supply side, according to SMM survey, Dongfang Hope Ningxia plans to put three furnaces into operation in April, while the rest will be commissioned later this year. Silicon metal supply is abundant, while downstream consumption is sluggish amid dismal real estate and automobile markets. Trading activity is likely to decline again following the unleash of rigid demand, which will expose silicon metal prices to downside risk next week.