Poorer domestic, overseas demand lowers silicon prices

SHANGHAI, Nov 13 (SMM) – Demand from domestic and overseas markets weakened in October as downstream plants placed orders ahead of the week-long National Day holiday from October 1. This weighed on prices of silicon last month. Operating rates across downstream aluminium alloy and organosilicon mills in October all fell from September. 

As currencies fell in South Africa and Brazil, their silicon products attracted greater purchasing interest from Japan, South Korea, and South-east Asia, who were major consumers of Chinese silicon. 

While electricity prices increased in Sichuan and Yunnan provinces in late October as the dry season set in, prices of silicon received limited support, pressured by high social inventories and sluggish downstream demand. Prices of metallurgical-grade silicon declined at the end of October and chemical-grade silicon traded at a stable level.  

High stability of chemical-grade silicon attracted downstream buyers, who stockpiled such products on expectations of lower output across silicon producers in Sichuan and Yunnan from November. Some downstream buyers even raised purchasing prices. However, such transactions were few and had limited impact on the market. 

Annual tenders from major overseas consumers ended, with prices for deliveries in the first quarter of 2019 far lower than current spot prices. This drove exporters to lower purchasing prices to maintain reasonable profits. 

SMM expects the weak trend in silicon prices to sustain through November and December as domestic and overseas consumptions are unlikely to rebound significantly in the short run.