Silicon Prices Likely to Stabilise in November

SHANGHAI, Nov 10 (SMM) - The domestic silicon metal market was sluggish after the National Day holiday, and the prices slumped led by oxygen-free 553# silicon. The prices of oxygen-free 553# silicon in east China stood at around 19000 yuan/mt as of November 9, falling by more than 29500 yuan/mt or 50% in merely a month. Other silicon varieties all saw price declines to varying degrees. For example, 421# silicon stood between 45000 - 52000 yuan/mt in east China. The transaction of silicon monomer plants and chemical-grade 421# silicon was in stalemate. The price spread between high and low-grade 421# silicon has been widening. The current price plunge was partly caused by the early resumption of silicon manufacturers in Dehong, Yunnan, who resumed production after suspending for only a week. The traders sold off in panic, and the market was generally bearish. On the other hand, the downstream operating rates dropped due to power rationing, and their demand also declined. Meanwhile, downstream silicone and aluminium alloy plants were under great pressures in face of high prices of silicon. The real transaction was slack as buyers tend to purchase on rises instead of dips, while they also refrained from the high prices. The near-term oversupply was still the major cause of silicon metal’s price declines.

On the supply side, silicon manufacturers in Fujian resumed production as the power restriction ended for the moment. The production in Yunnan and Sichuan has not shown signs of suspending on the back of falling silicon prices and short electricity supply. But the production is estimated to be suspended by end of November as Sichuan and Yunnan will enter low water period since November 25. Silicon manufacturers in Yili, Xinjiang reduced their operating rates since mid-October due to power shortage, and resumed to normal by early November. Therefore, the power rationing will not have significant impacts on the supply side in the short term.

On the demand side, the operating rates of aluminium alloy companies were at a low level for multiple factors, including the falling prices of aluminium and silicon, power rationing, and poor orders of downstream die-casting companies due to a bearish outlook. The shipment of silicone was not smooth as the downstream found the current price level hard to accept as DMC prices stood high. Silicone prices dropped since late October, and DMC prices declined to 30500 yuan/mt as of November 8. As such, silicon monomer companies suffered losses, leading to significantly lower operating rates as some conducted maintenance. The bid of chemical-grade silicon metal was also postponed and market participants remained wait-and-see. The new capacity of polysilicon and silicone will be launched by end of Q4, pushing up the consumption of some silicon metal.

As some silicon metal factories will suspend production by end of November in the low water period, the overall operating rates in December will drop greatly. The prices of oxygen-free 553# silicon is likely to stabilise under cost pressures on the back of traders’ demand to collect funds before year-end as well as downstream inventory level. While the prices of other silicon metal will stay weak.