SMM Analysis: Silicon Metal Prices Continue To Decline In February, Strong Supply And Weak Demand To Keep Short-Term Prices At Lows

In February, spot silicon metal maintained a weak trend. As of March 7, the price of standard #553 silicon at Huangpu Port was 10,600-10,700 yuan/mt, flat MoM, while above-standard #553 silicon was 10,600-10,800 yuan/mt, down 150 yuan/mt MoM. The price of #441 silicon was 11,000-11,200 yuan/mt, down 50 yuan/mt MoM. The futures market showed a downward fluctuation, hitting new lows. On March 7, the most-traded SI2505 futures contract closed at 10,120 yuan/mt, down 810 yuan/mt MoM. Silicon metal futures prices dropped significantly, with warehouse warrants and non-warrants flowing into the market, accelerating the decline in spot silicon metal prices. Market sentiment remained pessimistic.
On the demand side, the operating rate of polysilicon enterprises remained stable from February to March. Due to the decline in silicon metal prices, the order prices for silicon powder also weakened. The operating rate of polysilicon enterprises is expected to increase from April to May. For silicone enterprises, the operating rate from February to March showed a significant decline, mainly due to proactive maintenance of some silicone monomer capacities. The decline in silicone production reduced the demand for silicon metal. For silicone products, the decrease in DMC production, combined with restocking during the downstream "small peak season," pushed up silicone product prices, significantly improving the profitability of the silicone industry. The operating rate of the aluminum-silicon alloy industry gradually recovered to pre-Chinese New Year levels from February to March.
Based on supply-demand balance calculations, the industry experienced slight destocking from January to February. However, in March, with the increase in operating capacity on the supply side, production rose sharply, while there was almost no growth on the demand side, shifting the balance back to surplus. Polysilicon enterprises with integrated silicon metal capacities have relatively large production scales. Large-scale silicon enterprises (with annual capacities of 100,000 mt or more) increased their supply share, offering greater supply stability compared to small and medium-sized silicon enterprises. The fundamentals of silicon metal are expected to remain characterized by strong supply and weak demand in the near term, keeping spot silicon metal prices at low levels in the short term.