SHANGHAI, May 23 (SMM) - As of May 19, prices of standard #553 silicon metal were 13,900-14,100 yuan/mt in east China, down 650 yuan/mt or 3% from a week earlier, prices of above-standard #553 silicon metal stood at 14,000-14,300 yuan/mt, down 700 yuan/mt or 5%, and prices of #421 silicon metal were 15,500- 15,800 yuan/mt, down 700 yuan/mt or 4%. The 2308 industrial silicon futures contract suffered a 9-week drop. In addition, large enterprises in north China lowered their prices to promote shipments. Therefore, the confidence in the silicon market was once again undermined, and spot prices were particularly chaotic. Due to cost advantage, the silicon metal quotations in north China were generally lower than those in south China. In Kunming city, the prices offered by silicon plants and traders were divided. The prices of 421# silicon metal were in premiums of 700-900 yuan/mt against the futures prices. The prices of the 2308 futures contract stood at 13,550-13,920 yuan/mt as of May 18, while most silicon factories were unwilling to sell below 15,000 yuan/mt. From the perspective of market transactions, inquiries and transactions were relatively scarce this week as silicon metal prices continued to decline significantly. Enterprises also purchased only as needed. The operating rate of polysilicon enterprises was basically stable. During the week, polysilicon users mainly focused on digesting inventory and grinding plants primarily purchased as needed.
The operating rate of aluminium alloy enterprises declined amid blocked shipments and low profits. As such, they purchased industrial silicon metal as needed. The operating rate of silicone enterprises dropped slightly due to the production cut of Hengxing. The prices of DMC was running at a low level around 14,300-14,800 yuan/mt. Although the prices of 421# silicon metal offered by traders were significantly lower than those offered by silicon metal companies, some monomer factories such as Dongyue did not consider purchasing from traders due to strict procurement rules. The prices of low-titanium #421 silicon metal stood at around 16,300-16,600 yuan/mt (delivery to factory). The inquiries from monomer factories were active, but the actual orders were poor.
On the supply side, under the background of low silicon metal prices, lossmaking enterprises were increasing. Therefore, the operating rate of weakened. The electricity prices in Sichuan ranged from 0.41-0.48 yuan/kWh amid flat water period, but the prices in Yunnan still stood at 0.5 yuan/kWh due to the persisting dry season. The rainy season in Yunnan is postponed this year, hence local prices of electricity are expected to drop limitedly in June. As such, local silicon metal enterprises will resume production in batches after entering the rainy season in late June and early July.
On the whole, the current market sentiment was sluggish and bullish signals outnumbered bearish ones. The manufacturers in north China still have a strong willingness to reduce their inventory. However, given the weak downstream demand, the inventory will still stand high and silicon metal prices will continue to fall next week.
