SHANGHAI, May 21 (SMM) --
Operating rates were extremely low in southwest China which is the largest silicon producing region in China. According to SMM lasted survey on operating rates in April, operating rates were 31.4% in Sichuan province and operating rates were 15.35% in Yunnan province. In addition, many producers in Guizhou province halted production in May. In this context, it still takes time for operating rates to recover at domestic silicon metal producers. However, as downstream demand for silicon was sluggish in February, supply of silicon was still in surplus in the market.
Prices of domestic spot silicon metal have been down for a month, which is closely related to short position sentiment from purchasers. Purchasers and enquiries both increased in recent two weeks as purchasers planed to replenish stocks at the month end for production in June since previous inventories almost consumed out. Meanwhile, it also indicated that the sluggish demand will gradually warm up.
As Chinese Government will further increase efforts to regulate sectors with high energy consuming and high environmental pollution in 2H, local government at various regions will gradually release according measures to implement the regulation. Affected by this, production of silicon will be largely limited in 2H. Any specific measures on electricity price adjustment were not available at present, but rumors regarding such adjustment are spreading.
SMM believes that possibility for silicon price to fall further is limited as producers are waiting for policies on electricity price adjustment by the end of May and keep firm offers of silicon metal. Domestic silicon metal prices will remain stable before the release of such policies. It is expected that mainstream traded prices will be around RMB 12,200/mt for #553 silicon metal at Huangpu port, around RMB 12,500/mt for #441 silicon metal, RMB 13,200/mt for silicon metal and around RMB 14,000/mt for #2202 silicon metal.
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