SMM Weekly Forecast on China Silicon Metal Market (May 7-11)

SHANGHAI, May 4 (SMM) –

Supply:
Silicon metal producers are little changed during the first trading week following the May break from April. Operating rate at producers in Xinjiang is relatively high at present due to electricity advantages there, while that at producers in Inner Mongolia and Heilongjiang is low owing to high electricity prices. In South China, except for Sichuan and Yunnan which will face high-water period very soon, few silicon metal producers stay in operation in Fujian, Hunan, and Guizhou owing to high electricity prices and losses in production costs.

Demand:
Aluminum alloy industry has relatively high demand for silicon metal, but recent markets are dominated by low-end silicon metal, with limited high-quality goods. Organic silicon industry mainly consumes high-quality silicon metal including #441, #421, #3303, and #2202 silicon metal, while most polysilicon producers have now suspended production due to slack markets, leading to a significant drop in silicon metal demand. Purchasers are wary of buying silicon metal, so silicon metal prices will fall sharply over the near term.

Analysis:
Positive factors: high electricity prices, increasing raw material prices, and rising transportation fees.
Negative factors: Slack demand, rising operating rate at silicon factories on the arrival of high-water period, and high stocks.

Forecast:
Mainstream traded prices at Huangput port will be around RMB 11,700/mt for #553 silicon metal, RMB 12,500/mt for #441 silicon metal, RMB 12,900/mt for #3303 silicon metal and 14,800/mt for #2202 silicon metal in the following week.