SHANGHAI, May 14 (SMM) --
As the high-water period is just around the corner in southeast regions, local silicon producers will gradually resume production and operating rates at silicon metal producers will recover rapidly once the high-water electricity prices are executed. However, many EMM producers in Guizhou province which is the largest silicon metal producing region will gradually halt production before the end of May as producers in this region suffered from losses given that selling prices for silicon were lower than production costs.
Previous inventory will gradually be consumed out as overseas purchasers had adopted a wait-and-see attitude for several weeks. Meanwhile, demand for domestic spot silicon will increase significantly as demand from downstream alloy and chemical industry will grow mildly along with the recovery of global economy.
Electricity prices during the high-water period at various regions will be gradually announced as from late May. SMM believes that China's supply of silicon will in surplus in June, and silicon metal prices will be under pressure to fall further. However, Chinese Government will conduct inspection and regulate the silicon metal industry that has high pollution. Favorable electricity prices at producers with high pollution will be cancelled, and producers have furnaces blow 6300 kilovolt ampere will be eliminated by the end of 2010. Such regulations will affect production at silicon metal producers to great extent in 2H 2010.
SMM believes that China's domestic silicon metal prices will continue to fall slightly next week. It is expected that mainstream traded prices will be around RMB 12,200/mt for #553 silicon metal at Huangpu port, around RMB 12,700/mt for #441 silicon metal, RMB 13,300/mt for silicon metal and around RMB 14,000/mt for #2202 silicon metal.
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