From July to August, domestic silicon metal spot prices showed a trend of "accelerated decline - brief stabilization - decline again." As of August 17, the price of standard #553 silicon metal at Huangpu Port was 11,300-11,500 yuan/mt, down 550 yuan/mt MoM; above-standard #553 silicon metal was 11,400-16,000 yuan/mt, down 800 yuan/mt MoM; #421 silicon was 12,000-12,100 yuan/mt, down 1,050 yuan/mt MoM; and #3303 silicon was 12,600-12,700 yuan/mt, down 650 yuan/mt MoM. Weak downstream demand for silicon metal, combined with continuously falling futures prices, accelerated the market price decline. Supply side, silicon companies in Sichuan and Yunnan regions resumed to the operating levels of previous rainy seasons, while downstream demand increased only slightly, causing a temporary supply-demand imbalance and negative market sentiment. In August, the SI2409 contract easily broke below the 10,000 yuan/mt mark, with a low point reaching 9,165 yuan/mt.
Supply: According to SMM data, China's silicon metal production in July was 487,300 mt, up 7.5% MoM (+34,100 mt). Including silicon metal (Si≥97%) and recycled silicon, the supply in August was 549,000 mt, up 67% YoY. Although silicon metal spot prices in August fell close to 10,000 yuan/mt, some silicon plants had hedged in advance to lock in profits. Combined with the recent decline in raw material prices such as coal and electrodes, the cost decreased. Although some silicon companies reduced production in August, the reduction was limited and could not change the fundamental situation. Regarding futures warrants, according to data from the Guangzhou Futures Exchange on August 16, the total number of silicon metal warrants was 66,440 lots (332,200 mt), down 1,647 lots (8,200 mt) from the peak of 68,087 lots on August 8. The main reason for the reduction in warrants was the increase in trading volume due to the price advantage when the market fell below 9,500 yuan/mt.
Demand: The demand for silicon metal from polysilicon remained stable. According to SMM data, polysilicon production in July was 150,000 mt, down less than 1% MoM. Due to significant reductions by a leading company, polysilicon production in August is expected to drop to around 140,000 mt. Recently, new in-house silicon metal capacities from companies like Xinte and Baofeng have been gradually ignited, which will reduce the external procurement volume of silicon material companies in the future. The demand for silicon metal from silicone slightly decreased MoM. In July, domestic silicone DMC production was 202,200 mt, down 1.8% MoM. Due to the stable operation and increased operating load of newly commissioned monomer capacities, DMC production in August is expected to increase to around 217,500 mt, increasing the demand for silicon metal by around 8,000 mt. The operating rate of aluminum-silicon alloy was weak, mainly due to the off-season demand in the industry and the impact of policies such as the Fair Competition Review Regulations. The traditional peak season of "Golden September" for the silicone and aluminum alloy industries is approaching, which may have a certain boosting effect on demand.
Bullish Factors: Large losses for silicon companies, and futures prices falling to low levels.
Bearish Factors: Unresolved warrant issues, industry inventory unable to be reduced, and new in-house silicon metal capacities of polysilicon companies put into operation.
SMM View: The fundamental situation of oversupply remains unchanged. In July, national silicon metal production reached a new high for the year, with an estimated oversupply of nearly 120,000 mt for the month. The oversupply situation is expected to continue in August and September. From a cost perspective, except for leading companies, other small and medium-sized silicon companies generally suffer losses. However, the overall scale of production reduction by silicon companies is still limited. The warrant issue needs time to be resolved, and the industry adjustment cycle is not yet over. The situation of silicon metal prices operating at the bottom may continue.
Others: According to the China Association of Automobile Manufacturers (CAAM), in July 2024, the car market entered the traditional off-season, with some manufacturers taking high-temperature vacations, slowing down the production and sales pace. The overall market performance was relatively flat, with both MoM and YoY declines. In July 2024, automobile production and sales reached 2.286 million and 2.262 million units, down 8.8% and 11.4% MoM, and down 4.8% and 5.2% YoY, respectively. From January to July 2024, automobile production and sales reached 16.179 million and 16.31 million units, up 3.4% and 4.4% YoY, respectively.
![[SMM 분석] 석탄 가격 급등, 조질 칼슘 원가 상승 견인](https://imgqn.smm.cn/usercenter/pAOxy20251217171725.jpg)
