Low-grade silicon metals prices declined amid ample supply and weak demand

SHANGHAI, Apr 14 (SMM)—Silicon metal prices moved steadily in early March but trended lower in the last ten days of the month as stocks piled up at some silicon plants as trades weakened. Large output in Xinjiang and slower procurements from downstream aluminium alloy plants weighed on prices of silicon metal 553# with oxygen. Prices of other metallurgical-grade silicon metal followed lower, while chemical-grade silicon metal 421# was relatively firm due to smaller output. 

Consumption of low-grade silicon metal with oxygen rose slightly in March. Trades weakened in mid-to-late March ahead of  wet season and as demand from polysilicon and aluminium alloy producers declined. Operating rates in Yunnan saw year-on-year declines in March due to rising power tariffs, and this situation is likely to extend to mid-June. 

However, silicon metal output in Xinjiang saw year-on-year increases, reaching 360,000 mt, a new all-time high, in the first quarter, as local large-scale plants stepped up production. Higher output at large plants led to shortages of silica in Xinjiang, and some medium-scale plants that failed to purchase high-quality ore at reasonable prices had to produce lower-grade silicon metals. Rising supply resulted in the decline in metallurgical-grade silicon metal prices. 

Adjustments of power tariffs and a resurgence of COVID-19 cases in Yunnan made resumption across local silicon plants uncertain, and silicon metal prices are likely to fall in April.  Although the average production cost will decline in June, a high-water period, rising raw materials prices and power costs will support silicon metal prices.