Supply side, SMM data showed that silicon metal production in February was 275,700 mt, down 26.6% MoM and 5% YoY. On one hand, production cuts by top-tier enterprises had a significant impact on the month's output, and on the other hand, there was a reduction in the number of production days. If converted to daily production, the average daily production in February decreased by about 19% MoM.
In early March, some of the suspended capacity in Xinjiang resumed production, and with additional resumption plans within the month, it is expected that silicon metal production in March will increase to over 340,000 mt MoM, with an average daily production increase of about 13% MoM.
Demand side, the resumption of work for secondary aluminum alloy after Chinese New Year is concentrated between the eighth and fifteenth day of the first lunar month, with the operating rate of aluminum alloy in March being in a rapid recovery phase. The operating rate of polysilicon in March increased slightly, with limited production growth. The operating rate of silicone in March is expected to increase MoM.
Overall, both supply and demand for silicon metal increased in March, with the supply increment exceeding the demand increment. Under the pressure of industry supply, silicon metal prices are consolidating at lows. Inventory-wise, some silicon enterprises have relatively low in-factory inventory pressure, while the bulk of the inventory is concentrated in the intermediary trading segment, with the liquidity of goods closely related to fluctuations in futures prices. Recently, attention should be paid to changes in the industry's operating rates, as well as any policy news that may impact market sentiment.
