SMM Weekly Forecast on China’s Silicon Market

SHANGHAI, Sep. 10 (SMM) --

Supply

Output will from newly-started furnaces at silicon metal producers in Yunnan region from mid and late September, which will help ease tight supply of silicon metal. Flat-water period electricity prices charging standard will be adopted from October, so operating rates before October will increase given lower electricity charges. When entering into November, electricity price in Guizhou regions will adopt low-water charging standard, so most silicon metal producers will increase silicon metal output when profits are high at current price level. If government doesn’t implement crackdown on energy conservation and emission reduction policy at silicon metal producers in south west and north east China before late September , operating rates at silicon metal producers in September will be higher from those in August.

Demand

As the Q3 will come to an end, silicon metal downstream producers begin to increase purchases for silicon metal. Since silicon metal prices usually rise steadily during low-water period in Q4, most domestic and overseas consumers will increase stock replenishments for spot silicon metal despite current prices are high. In addition, consumers’ willingness to purchase goods is high before the coming of China’s Middle Autumn Day holiday and the National Day holiday.

Analysis

Warehouses at Huangput port, a major spot silicon metal export port, have already full, and most of silicon metal stored in these warehouses haven’t been ordered by overseas consumers. Spot silicon metal supply at main producing regions is slightly tight. The recovery of downstream demand allows domestic silicon metal producers keep offers firm and constantly lift offers.

Forecast

SMM believes that mainstream traded prices of silicon metal at Huangpu port will be around RMB 12,900/mt for #553 silicon metal, will be around RMB 13,700/mt for #441 silicon metal, will be around RMB 14,100/mt for #3303 silicon metal and around RMB 14,800/mt for #2202 silicon metal in the following week.

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