Silicon prices may face downward pressure due to poor fundamentals, but downside room will be limited on cost support

Prices of low-grade silicon rose slightly, and the most-traded futures contract hovered around 12,000 yuan/mt, giving confidence to suppliers. Production ramp-up at large producers in Xinjiang in May-July, along with expected increase in production in south-west China during the rainy season, will boost market supply. Poor profits will discourage downstream producers from buying too much silicon. Therefore, silicon prices may face downward pressure. However, solid cost support should limit the downside room.