Silicon trading thin in May on anticipated growing supply

SHANGHAI, Jun 15 (SMM) – Traders and downstream consumers in China’s silicon market held back from buying in May in anticipation of growing supply as silicon plants ramped up production amid rainy season. Buyers purchased to finish orders or on demand.

Prices of metallurgical-grade and chemical-grade silicon fell across the board in May except for non-oxygen #553. Prices of non-oxygen #553 silicon remained firm on tight supply. High-grade silicon saw relatively sharp declines in prices and the price spread with low-grade silicon narrowed.

Most market participants are bearish on silicon prices as costs at silicon plants in south China would fall amid rainy season and as recovery of operations at silicon plants would drive up output.

Besides, sluggish downstream demand also weighed on silicon prices.

Production of aluminium alloy and organosilicon, which are the major consumers of silicon, was affected by environmental inspections. Some small-sized aluminium alloy plants in Jiangxi, Shandong and Guangdong provinces temporarily ceased operations or operated at night.

Many polysilicon producers, another downstream consumer of silicon, began or planned to undergo maintenance for one to two months after Chinese government’s decision at the end of May to curb solar power capacity growth and cut subsidies. This is expected to affect over 60% of overall capacity of polysilicon.

Silicon prices are likely to extend their declines in June-August on rising supply and weak demand, and are likely to rebound in September when downstream consumption picks up.