SHANGHAI, Jun. 4 (SMM) --
High-water period electricity prices will be implemented in southwest China in June, and operating rates at silicon metal producers will recover rapidly in those regions. China's supply of spot silicon is expected to increase significantly by then. However, other regions, except southwest China, electricity price hikes may occur throughout the rest of China and producers in other regions planned to halt production due to high cost pressure at present.
Affected by recent global economic downturn, growth pace of gross industrial output slowed down at various countries. The aluminum alloy industry also experienced the sluggish performance and prices of aluminum alloy slipped rapidly due to sharp decline of aluminum prices. Some aluminum alloy producers also began to cut production or to replace silicon metal with scrap aluminum. Demand from other downstream industries, including polysilicon and organic silicon industries, was relatively stable.
Silicon price performance in June is largely depended on demand both from home and abroad. SMM believes that downstream demand for silicon metal was still sluggish due to sluggish macro financial environment with market dominated by wait-and-see sentiment. Spot inventories of silicon in Southwest China will increase significantly after impact from the drought waned. Silicon metal producers in other regions planned to shut production due to electricity price hike in silicon metal major producing regions, but any impact from the production cut shall be limited in the short term.
It is expected that mainstream traded prices at Huangpu port will be around RMB 11,150/mt for #553 silicon metal, around RMB 12,000/mt for #441 silicon metal, RMB 12,600/mt for silicon metal and around RMB 13,500/mt for #2202 silicon metal.
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