Procurement of Silicon Metal Slowed Down amid the Tug-of-war between Upstream and Downstrem

SHANGHAI, Sep 19 (SMM) - The silicon metal market was less robust in the wake of the Mid-Autumn Festival holiday, and several specifications of silicon metal traded at discounts. As of September 16, the prices of 553# silicon without oxygen stood at 18,900-19,200 yuan/mt in east China, down 250 yuan/mt or 1% on the week, and 553# silicon with oxygen 20,200-20,400/mt, down 150 yuan/mt or 1% on the week. Prices of 441# silicon 20,700-20,800 yuan/mt, down 50 yuan/mt on the week and 3303# silicon 21,000-21,200 yuan/mt, down 50 yuan/mt on the week. Power rationing policy in Yunnan has not been implemented yet, and the silicon metal plants in Xinjiang that had suspended the production due to the pandemic gradually resumed the operation as pandemic was under control. The downstream enterprises and traders were cautious about purchasing. Lowgrade silicon metal prices rebounded slightly, while most silicon metal plants held their offers firmly, thus there were rarely any low-priced resources. Downstream orders on rigid demand from aluminium alloy, silicone, and grinding plants continued to be released, but the transactions declined compared with the prior week.

On the demand dise, the average operating rate of leading primary aluminium alloy enterprises increased slightly by 2 percentage points, while that of secondary aluminium alloy enterprises remained stable. Since the new orders downstream enterprises received are limited, the operating rates of aluminium alloy enterprises are expected to be flat in the short term, and the enterprises will mainly purchase silicon metal as needed. As a result, silicon metal prices declined and the purchase prices were bargained down. The operating rates of silicone enterprises remained weak, and the DMC prices fell back to around 18,800-19,500 yuan/mt. The main reason was that the downstream buyers, who had restocked silicone before the Mid-Autumn Festival holiday, had lower demand for it, thus the trades in the market were muted. The operating rates of polysilicon producers remained high. According to SMM statistics, the polysilicon output in September is expected to increase about 13,000 mt compared with August, contributing to the recent big increase in the demand for silicon metal and providing support for the prices of silicon metal.

The aluminium smelters in Yunnan already cut the production capacity by 10% in accordance with the power rationing policy, and the number of enterprises restricted by power rationing may increase subsequently. The local silicon metal plants were under normal operation, but there is a high possibility they will be subject to power rationing in the later period. However, some traders still had doubts about whether power rationing could induce the rise in silicon prices as they were bearish towards the demand from aluminium alloy and polysilicon sector as well as the overseas market, thus the market trades thinned. It is expected that silicon metal prices will remain stable this week.