SMM silicon market briefing: Sichuan and Yunnan high water season drought supply less demand weak silicon price how to go?

SMM6, March 3, news:

Supply: the drought situation in Yunnan continues, in addition to the Nujiang silicon plant has basically resumed production, Dehong, Baoshan and other places open the number is far lower than the same period last year; Sichuan Ya'an, Leshan, Aba production situation is basically normal compared with the same period last year, while Liangshan is affected by drought and market factors, the number of construction is on the low side compared with the same period last year.

Demand: aluminum alloy due to the decline in demand for major terminal vehicles, the overall industry situation is poor, the reduction of start-up load, high inventory of finished products, cost and price upside down is more common and will continue in the short term;

Due to the limited strength of silicone monomer due to less downstream construction, some monomer enterprises also have some maintenance or production reduction, and the off-season of the industry may end in late July.

The price of polysilicon is still at a historical low. In June, the maintenance and repair of polysilicon enterprises with an annual production capacity of more than 10,000 tons stopped production to a certain extent to support the price, and the supply pressure has been greatly alleviated, but the recovery of demand and price will take some time.

Lido: Xinjiang ore problem is difficult to recover in the short term, ore supply affects prices, social stocks are low.

Bearish: Yunnan Sichuan silicon plant opened the furnace increased, aluminum alloy, organosilicon, polysilicon three downstream start-up compared with the weak.

SMM view: SMM at the end of April expected silicon prices to rise in June (see SMM Silicon Market Bulletin: loss of production capacity increase silicon prices fall when will it stop? This view is mainly based on two reasons: the downstream inventory reserve is low and the supply is not keeping up. Under the influence of the ore emergency in Xinjiang in May, this part of the increase has been overdrawn in advance. From the perspective of supply and demand pattern, if it is not disturbed by uncontrollable events, it is very difficult for the short-term silicon price to rise again. After the stable output of Yunnan Sichuan Silicon Plant in late June, the sentiment of holding up prices and cherishing sales in the market will gradually disappear. The seasonal off-season superimposed growth rate on the consumer side is weaker, and it is difficult for demand to recover substantially. In July, silicon metal will gradually enter the accumulation stage, and prices may be at risk of weakening.

Other: 1. In April 2019, China's silicon metal exports were 57000 tons, down 20.4 percent from the previous month and 11.8 percent from the same period last year. From January to April, China's cumulative export volume of silicon metal was 234000 tons, down 106 per cent from the same period last year.

two。 In April 2019, China's aluminum alloy wheel exports were 70100 tons, down 11.9 percent from the same period last year and 10.0 percent from the previous month. From January to April, the cumulative export volume of China's aluminum alloy wheels was 291900 tons, down 4.5 per cent from the same period last year.

3. According to the statistical analysis of the China Association of Automobile Industries, in April 2019, from the completion of production and marketing in that month, the overall downward trend of production and sales in the industry was not effectively alleviated compared with January-March. Although the decline in production and sales in March was narrower than in the previous two months, March was a month at the end of the first quarter, with performance review demand and impulse production and wholesale. Judging from the combined situation in March and April, production and sales totaled 4.61 million and 4.5 million, down 8.3 percent and 9.6 percent, respectively, compared with March and April last year. Although the cumulative reduction was 1.5 percentage points and 2 percentage points respectively from January to February, the decline was still at a high level.

At present, the main reason for the market downturn is the lack of consumer confidence, in addition, affected by the switch between the five countries and six standards, as well as the expectations of national consumer stimulus policies and other factors, consumers wait-and-see mood is obvious. However, with the gradual landing of a series of national tax reduction and fee reduction policies, and the gradual role of infrastructure investment in promoting the consumer market, we are full of confidence in the stable development of the automobile market throughout the year.

4. China's Caixin manufacturing sector recorded a higher-than-expected PMI of 50.2 in May, unchanged from the previous figure of 50.20.

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