SHANGHAI, Dec 6 (SMM) - Silicon metal prices generally fell last week. As of December 2, in east China, prices of standard #553 silicon metal were 18,600-18,900 yuan/mt, down 50 yuan/mt WoW, those of above-standard #553 silicon metal stood at 19,300-19,700 yuan/mt, down 450 yuan/mt WoW, and those of #421 silicon metal were 20,500-20,600 yuan/mt, flat from the previous week. Sichuan and Yunnan entered the dry season one after another this week. The silicon metal companies’ profit margins narrowed amid rising costs, and their quotations stabilised. Market trading improved slightly as the downstream producers placed some orders based on rigid demand. However, due to the lack of confidence in the market outlook and the buyers’ strong intention to lower their offers, silicon metal prices fluctuated with some declines.

The operating rates of aluminium alloy enterprises generally dropped. In south-west China, south China and central China which are struck by COVID-19, secondary aluminium alloy enterprises maintained their production by adopting closed-loop management, but the shipments of raw materials and finished products were hindered. Besides, the downstream companies also cut their production. In some regions, the operating rates of secondary aluminium alloy producers declined amid the poor new orders and shrinking profits. In December, the operating rates of secondary aluminium alloy producers are unlikely to rise due to poor demand. The operating rates of silicone enterprises rose as some capacities resumed the production from overhaul. DMC prices fell to 16,600-17,500 yuan/mt amid the growing supply but shrinking demand for silicone. Some monomer companies suffered huge inventory pressure, and they purchased #421 silicon metal on rigid demand amid the low DMC prices. Polysilicon output continued to grow as new production capacity ramped up. Polysilicon prices were on a downward trend, but compared to the production costs, polysilicon manufacturers still got high profit margins, hence the long-term demand for silicon metal will remain strong.

As silicon metal prices continued to fall, some cargo holders quoted lower amid the inventory pressure. With the release of downstream rigid demand, the market trading may improve. However, the spot supply will be under pressure, and the silicon metal prices will mainly remain rangebound with some declines this week.