SHANGHAI, Jul 2 (SMM) – Prices of silicon are unlikely to rebound in July following over a month of decline since late May, SMM believes. However, drops across several specifications are expected to slow down with cost support.
We expect the downward trend to only reverse at the end of the third quarter when consumption picks up, or when high-cost production capacity exits the market.
Silicon supply will continue to rise in July, contributed by the release of output across producers in south China.
In Sichuan and Chongqing, local producers will see normal production as many have come back online following the rainy season. In fact, the number of operating furnaces has reached the highest level so far this year.
Supply in north China is expected to be flat. While a large-scale plant in Xinjiang has yet to resolve its power supply issue, other new capacities are set to be commissioned in October, at the earliest.
On the demand front, slack season of the automobile industry in July will weigh on aluminium alloy consumption. As of Monday July 2, operating rates were rather low at around 60% across major aluminium alloy producers in Zhejiang, Jiangsu, and Hebei provinces. Some small-sized producers suspended on environmental ground.
Operating rates at organic silicon producers are likely to dip in July due to scheduled maintenance and environmental probes. In addition, they mostly made procurement in small volumes based on demand as silicon prices kept declining.
More than half of the polysilicon capacity will be under maintenance in July, and silicon powder plants will see new orders shrink as a result.
Overseas orders are also expected to dip as consumers in Japan, Korea, and European countries enter summer break on high temperature.
As of Monday July 2, the #553 non-oxygen silicon metal mostly traded at 11,500-11,700 yuan/mt at Huangpu port in Guangzhou, down 50 yuan/mt from last Friday, and down 1,000 yuan/mt from May 25, when the market began to fall.
