Silicon Wafer Production Reduction Leads to Rising Silicon Sludge Prices, Recycled Silicon Companies Stand Firm on Quotes [SMM Analysis]

During the National Day holiday, the price of recycled silicon from medium-frequency furnaces increased significantly compared to pre-holiday levels. The ex-factory price of 331# recycled silicon reached as high as 12,400 yuan/mt or even higher, with an increase of 200-400 yuan/mt compared to pre-holiday prices. After the holiday, the spot prices of silicon metal from electric arc furnaces also saw a slight increase, but only by about 50-100 yuan/mt, which was less than the increase for recycled silicon. Recycled silicon manufacturers collectively stood firm on quotes, mainly due to increased costs amid rising prices of raw material silicon sludge, and the scarcity of silicon sludge, which could lead to production cuts or stoppages.

Silicon sludge is mainly produced in the slicing process, so the production volume of silicon wafers essentially determines the market supply of silicon sludge. According to SMM data, the domestic production of silicon wafers in September was 46.67GW, down 7.73GW MoM, a decrease of 14%. YoY, it decreased by 15GW, a drop of 24%. From the data on silicon wafer production from January to September, the month with the highest supply was March, with 72.56GW. Due to the supply-demand imbalance, silicon wafer prices fell, leading to industry losses and production cuts. The production of silicon wafers in October is expected to drop to around 45GW.

The low operating rate of silicon wafer companies has significantly reduced the supply of silicon sludge. In the silicon sludge tenders from September to October, prices have continuously risen. In September, the price of silicon sludge was 2,800 yuan/mt, and the current procurement costs have soared to over 3,600 yuan/mt. The production cost of recycled silicon has increased, with costs exceeding 12,600 yuan/mt after deducting the benefits from silicon slag. Additionally, the tight supply of silicon sludge cannot be alleviated for the time being, so recycled silicon companies have a strong sentiment to stand firm on quotes.