Review of Silicon Metal Market in 2022

SHANGHAI, Jan 3 (SMM) - Prices of silicon metal fell from a high level at the end of 2021. In 2022, the prices of silicon metal fluctuated around 20,000 yuan/mt. Silicon metal prices hit the lowest for 2022 in early June as the consumption of organic silicon and aluminium alloy across Shanghai, Jiangsu and Zhejiang continued to weaken. In the third quarter of 2022, silicon metal prices edged up amid continued commissioning of new polysilicon production capacity. Consumption of organic silicon and aluminium alloy as well as exports were slack in the fourth quarter. And the prices of silicon continued to drop amid strong supply and weak demand.

1. From January to February 2022, domestic silicon metal inventories were on the decline. That, coupled with the ramp-up of newly-commissioned organic silicon and polysilicon capacity, pushed up silicon metal prices.

2. From March to June 2022, silicon plants resumed production thanks to abundant rainwater and hydropower supply, growing the total domestic silicon metal supply by nearly 40% year on year. However, the demand in east China, south China, and north-east China was affected by the COVID-19 pandemic. And the poor demand pushed down the silicon metal prices. Prices in Hunan and Guangxi where the costs were high fell below the producers’ breakeven point at one time.

3. From July to September 2022, demand from organic silicon, the largest consumer of silicon, was poor due to negative factors, hampering the shipments of high-grade #421 silicon. Export orders were subdued. On the other hand, power rationing and the COVID-19 pandemic fuelled market uncertainties over the supply. And the commissioning of new polysilicon capacity as scheduled ensured robust demand for silicon metal. The launch of silicon metal futures increased participation of market capital. In this scenario, the prices of silicon metal fluctuated at high levels.

4. From October to December 2022, the prices of downstream organic silicon DMC remained at low levels, thus expanding losses at DMC plants. Meanwhile, lower operating rates of organic silicon plants resulting from maintenance weakened the demand for silicon metal further. The other two consumer areas, aluminium alloy and exports, were also subdued. Although higher electricity prices in Sichuan and Yunnan pushed up the average cost of the silicon metal industry, ample spot supply continued to weigh down silicon metal prices.