SHANGHAI, Oct 26 (SMM) – The silicon metals prices skyrocketed in September and started to fall after the National Day holiday in October. The prices of oxygen-free 553# silicon basically lost all the gains in September, and the prices of high-grade silicon was relatively firm.
The rainfalls declined in south-west China in late October, and the smelters intended to cut production. However, the consumption of the aluminium alloys remained weak, and the purchase of the organic silicon and polysilicon declined as well. The game has intensified in the industry chain.
Supply: The operating rates of silicon plants are expected to drop slightly from the previous month in October. A company in Xinjiang has shut down 1/3 of the furnaces due to the insufficient power supply. At the same time, under the influence of the double control of energy consumption, the work resumption of the suspended plants in Fujian is uncertain. The operating rates in Yunnan and Sichuan may decline as well, which will depend on the local rainfalls and the dual control of energy consumption.
Demand: The aluminium alloy production has not resumed under the pressure of power rationing and high raw material prices, and the consumption is not robust in the peak season. The power rationing and annual maintenance of organic silicon monomer enterprises will affect the start of the fourth quarter, and the power rationing also weighs on the production of polysilicon. The export demand stood high, as the previous overseas safety inventory was low amid the high domestic prices, and the restocking increased near the end.
Bullish factor: The silicon plants in south-west China are about to cut reduction, the dual control of energy consumption continuously affect the production, and the social inventory is lower on the year.
Bearish factor: The weak demand for aluminium alloys, and the wait-and-see sentiment in the organic silicon and polysilicon markets.
The downstream users usually stock up before the dry season in previous years. However, the silicon prices are currently at a high level, so the downstream willingness to stock up is not strong. The operating rates are uncertain amid the simultaneous decline in supply and demand as well as the power rationing and dual control of energy consumption. The downstream users postponed the purchase with the wait-and-see sentiment. The slight shortage in supply still exists this year, and the silicon prices may rebound amid the overseas restocking and the shrinking supply.
