Yunnan smelters resumed production after the holiday, silicon prices rose amid low social inventories

SHANGHAI, Jul 15 (SMM) — The silicon market was on a stable and rising trend in June. A fire broke out in a workshop of an organic silicon factory in Xinjiang on June 8. Market transactions were active in the fear of a reduction in silicon metal production. Prices of the low-grade 5 series silicon that was originally weak began to move upwards. Large factories in Xinjiang confirmed production cuts in late June, which continued to drive the prices of low-grade silicon. Prices of Oxygen-free 553# silicon in East China stood at 13,350 yuan/mt by the end of June, up 650 yuan/mt from the lowest price in the first half of the year. Prices of oxygenated 553# silicon stood at 13,950 yuan/mt, up 750 yuan/mt from the lowest price in the first half of the year. Yunnan's power curtailment was eased. Silicon plants in various parts of Yunnan resumed production after the Dragon Boat Festival. They mainly executed old orders, with less spot circulation and low social inventories. High-grade silicon metal prices mainly traded at a high level with a stable increase.

The resumption of production during the flood season this year was delayed by more than a month compared with previous years due to power curtailment in Yunnan. Social inventories of silicon metal were digested to a historical low of 24,000 mt, down 21,000 mt or 46.7% from the same period last year. Prices of raw materials such as petroleum coke and refined coal increased, and the power bill in Yunnan's flood season increased by 0.07-0.1 yuan/kWh, lifting up the cost of production. Social stocks have not yet entered the stage of accumulation, which also accounted for the increase in operating rates of the silicon plants in June and firm silicon prices. Social stocks began to pile up in July, which may put an end to this round of increases in silicon prices.

The production cut in Xinjiang in early July will return to normal, and the supply of low-grade oxygenated silicon will increase. There will be more rains in July in Sichuan. The shortage of hydro-power led to a decrease in the proportion of supplementary supply from the State Grid. Power costs decreased slightly from the previous month. Prices of 5 series silicon metal are expected to trade weekly in July, and there is a high probability that it will gradually pull back to the level of early June. Output in Sichuan and Yunnan gradually increased, while the downstream silicone market was active, and the spot quantity was still small. It is expected that prices of high-grade silicon will mainly maintain stable trading and pull back weakly after stocks increase sharply at the end of July.