SHANGHAI, Jul. 20 (SMM) –

Supply
According to SMM survey, silicon metal stocks at Huangpu port's Hongkai and Yuehua warehouses rose above 30,000 mt this week, and above 40,000 mt at two major warehouses in Yunnan's Kunming, both up from previous weeks. The selling price of silicon metal has now fallen below production costs, propelling an increasing number of silicon metal producers to scale back or even halt production. At the same time, they become unwilling to sell at low prices. Despite a drop in market supply, overall silicon metal supply still exceeds overall demand at present.

Demand
Market participants in the US and Europe are generally on holiday and thus have reduced purchases of silicon metal, while China's downstream demand is not seen to improve. Aluminum alloy producers can buy metallurgical-grade silicon metal in small quantities. Silicone producers, though, reported low operating rates and polysilicon market is slack, so market participants barely enquiry prices of chemical-grade silicon metal although they are low.

Forecast
Silicon metal prices are still dipping this week, but the falling momentum has eased some compared with the previous two weeks. Buyers in markets are recently divergent about purchases with some already begin replenishing stocks on expectation silicon metal prices will rebound in the near future. Other, however, took a wait-and-see stance, foreseeing the low silicon metal price will occur in early August. As such, SMM believes that China's silicon metal prices will drop by RMB 100-200/mt in the coming week.

Mainstream traded prices at Huangpu port will be around RMB 10,200/mt for #553 silicon metal, RMB 10,800/mt for #441 silicon metal, RMB 11,700/mt for #3303 silicon metal and 12,900/mt for #2202 silicon metal in the following week.