Silicon Market is Cold as Downstream Enterprises Purchase as Needed

SHANGHAI, Apr 21 (SMM) - The silicon metal prices fell slightly this week. As of April 21, prices of standard #553 silicon metal in east China were 15,100-15,300 yuan/mt, down 250 yuan/mt WoW, and those of above-standard #553 silicon metal stood at 15,200-15,500 yuan/mt, down 250 yuan/mt. #441 silicon metal prices were 16,000-16,200 yuan/mt, down 100 yuan/mt and #421 silicon metal prices stood at 17,100-17,300 yuan/mt, down 250 yuan/mt. Orders placed by aluminium alloy and polysilicon sectors grew compared with last week, and the silicon metal 2308 contract climbed early this week, attracting inquiries in the spot market. However, the market mainly saw transactions on demand.

Aluminium alloy enterprises maintained normal production this week. The price difference between aluminium and silicon metal expanded to over 3,000 yuan/mt amid the downward trend of the latter, hence the costs of alloy companies fell compared with last year. Enterprises in north China got a relatively abundant in-plant inventory of silicon metal amid the dropping silicon metal prices, and many alloy producers in Sichuan and Yunnan bought silicon metal on demand as the rainy season is approaching. Silicone companies also maintained normal production this week. Yesterday, some monomer factories resumed operation while some cut production. With the completion of maintenance, the operating rates of monomer factories will rise slightly in May. DMC prices stood at 14,800-15,500 yuan/mt, bringing losses to monomer companies. In China, the silicone sector is the major consumer of #421 silicon metal, whose demand accounts for30% of the total consumption. Therefore, the low DMC prices have a great negative impact on #421 silicon metal prices. The operating rates of polysilicon producers remained high. Recently, polysilicon bidding orders have been released one after another. The cautious grinding plants offered lower purchase prices for silicon metal.

In summary, silicon metal prices have been hovering at lows, which greatly suppressed the companies’ profit margins. For example, silicon metal enterprises outside Xinjiang generally bore losses based on the full costs. Some companies in Shaanxi, Inner Mongolia and other places cut production for maintenance. The supply of and the demand for silicon metal currently both stand low, thus big downstream factories in the north seize the chance to offer lower prices for low-grade silicon metals.

On April 25, electricity prices in Sichuan will gradually return to normal with the improvement in weather conditions. With Sichuan and Yunnan provinces officially entering the rainy season in June, the silicon metal supply will increase amid the dropping production costs. On the other hand, consumption recovers slowly, which is unlikely to offer momentum to the silicon metal prices. SMM believes that the silicon metal prices will be stable with occasional falls in the coming week on cost support.