SMM Silicon Market briefing: when does the price of silicon stop falling in the off-season when supply resumes demand?

SMM7 News of the 10th of July:

The southwest silicon plant has basically returned to the supply level in the previous high water period, while the Xinjiang silicon plant has resumed production due to the solution of the ore problem. July coincides with aluminum alloy, silicone and other downstream consumption off-season, multiple negative superposition of silicon prices when can bottom?

Supply: in addition to Lincang in Yunnan to start more recovery, a small number of silicon plants in Sichuan have not yet started the rest of the basic resumption of production, Xinjiang to resume production before production reduction, while Fujian, Qinghai and other regions of high-cost production capacity shut down increased.

Demand: the stock of recycled aluminum alloy products is high and the price is declining, many aluminum alloy enterprises began to control the purchase of raw materials inventory more cautiously; primary aluminum alloy

Lido: the construction of Sichuan and Yunnan is on the low side compared with the same period last year, some high-cost production capacity in Fujian, Qinghai and other regions has been shut down, and output in the first half of the year decreased significantly by more than 20% compared with the same period last year

Bearish: supply increases downstream consumption off-season continues, social inventory from go to the warehouse to tired, the market mood is pessimistic.

SMM point of view: Sichuan and Yunnan construction in July will reach the highest in the year, and Xinjiang supply has also returned to normal, downstream consumption in the off-season continues to predict that silicon prices in July will fall sharply below the industry production cost line. The continued decline in silicon prices will induce a small number of production capacity to start to reduce production in August to support the stabilization of silicon prices, aluminum alloy, silicone seasonal off-season in late August after the end of the market volume will gradually pick up, silicon prices significantly warmer or appear in September.

Others: China's passenger car production rose 6.4% from a month earlier to 1.565 million in June 2019, down 17.6% from a year earlier, according to the federation. In terms of sales, passenger car sales in June were 1.766 million, up 11.6 per cent from a month earlier and 4.9 per cent from a year earlier.

According to data analysis, the retail growth in June was mainly based on the national five models that had to be "forced" to complete the clean-up by the end of the month. Due to the tight time and heavy task of the inventory digestion of the national five models, coupled with the continued weakness of terminal consumption since the first half of this year, this has brought great pressure to dealers and manufacturers. Even if some manufacturers have arranged various pre-plan measures such as inventory adjustment, most dealers also realize that only by realizing independent sales can the comprehensive loss digested by Guowu be minimized, so dealers still strive to achieve retail, and also focus on the target of half a year or the whole year. At the same time, we look forward to making up for the loss caused by the inverted price through horizontal services such as finance, fine goods, insurance, etc., or striving for fuzzy incentives for mainframe factories. Therefore, since the beginning of June, manufacturers began to cooperate with dealers to carry out large-scale targeted sales promotion, the use of all channels to achieve the final hard landing of Guozhou six switching, thus stimulating the car market retail into a positive.

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