Silicon Prices May Fall in Short-term and Rebound in End-December

SHANGHAI, Dec 6 (SMM) – The price trends of silicon metal diverged by specifications in November after falling for a whole month in October. The prices of most metallurgical-grade silicon metals rose briefly in mid-October and then pulled back rapidly, mainly because the downstream restocking demand rose intensively in a short term and then declined. The prices of 421# silicon continued to drop amid the stalemate between the silicon metal plants and silicone companies.

Supply: The output of silicon metal increased by 27,000 mt to 300,000 mt in November. The silicon plants in Fujian gradually resumed the production after power rationing ended, more large plants in Xinjiang resumed the production, and some plants in Yunnan raised the operating rates slightly.

The plants are expected to gradually reduce or suspend the production in mid-December due to the rising electricity costs and falling silicon prices. The power supply is tightening in south-west China, and the more silicon plants may suspend the production by the end of December.

Demand: The power rationing for aluminium alloy enterprises basically ended, but the overall production of the aluminium alloy enterprises stood low amid high raw material prices and sluggish downstream orders. Some silicone enterprises were conducting maintenance, and the output of new capacities grew slowly. The operating rates of polysilicon enterprises increased amid alleviated power rationing.

Bullish factor: The electricity prices rose in south-west China.

Bearish factor: The operating rates of silicon plants was high, the social inventory stood high, and the downstream held negative expectations.

SMM insight: The silicon prices are expected to keep falling in the short term as the plants maintained high operating rates, and the social inventory and in-plant stocks of silicon metal stood high. The falling prices may suppress the operating rates, and the downstream users have low inventories of silicon, so the silicon metal prices may rebound slightly in December.

China's silicon metal exports in October 2021 were 51,000 mt, a drop of 29% month on month and 12% year on year, according to customs data.

The total exports from January to October stood at 657,000 mt, up 34% on the year.