Silicon prices surged amid extensive power rationing

SHANGHAI, Oct 13 (SMM) - The silicon metal prices surged broadly by over 120% in September from the previous month, with 553# silicon with oxygen leading the gains. As of September 30, 553# silicon with oxygen in east China stood at 59,000 yuan/mt, up 154% on the month. The short supply of spot amid extensive power rationing in Yunnan and Sichuan was the main reason for the short-term surge of prices. While the production costs also increased on the back of rising prices of raw materials such as clean coal, supporting the silicon metal prices as well.

The power rationing eased in Yunnan in late September, with the focus on the recovered production in Dehong. The prices of silicon stabilised gradually, and more traders chose to make shipments after the profit target was fulfilled. The sell-off could also be found ahead of the National Day holiday, pulling back the transaction prices of metallurgical grade silicon. The supply of 421# silicon (chemical grade) was also tight, and the prices for October have been settled between 66000-68000 yuan/mt.

The operating rates of aluminium alloy companies were low even in the traditional seasonal high under the impact of chip shortage. The output of primary aluminium alloy fell amid weak supply and demand. And more secondary aluminium alloy companies suspended their production owing to the power rationing policy. Therefore, the overall operating rates of the aluminium alloy sector dropped, and the downstream mostly purchased on rigid demand. Most organosilicone monomer plants purchased in the form of monthly call for bids, and the rising prices of DMC have also increased their appetite for higher prices. The organosilicone monomer plants that plan to commence production later have created the demand for silicon metal. The profits of polysilicon companies remained lucrative, and are active in restocking.

The restocking demand of the downstream is likely to increase in mid and late October during the dry season. While the market shall keep an eye on the impact of falling operating rates on the short-term demand of silicon metal amid power rationing against the downstream sector. The silicon metal market is likely to be weak in the short term, and the prices of metallurgical grade silicon will rebound further.