The Upward Trend Weakens, Silicon Coal Prices Remain Stable [SMM Analysis]

Recently, the prices of silicon coal, a raw material for silicon metal, have stabilized. The previously rapidly rising prices of silicon coal in Ningxia have also mostly remained stable in recent days.

By the end of this month, the sentiment for furnace shutdowns among silicon enterprises in south-west China is high. In the regions of Dehong, Baoshan, and Nujiang in Yunnan, some silicon enterprises have already started sporadic furnace shutdowns and production cuts since last week, further weakening the demand for raw materials in south-west China. As the month is about to end, the furnace shutdown plans of silicon enterprises in Sichuan and Yunnan are concentrated on the 31st of this month. Recently, most raw material restocking and procurement have basically been suspended. For the small furnace capacity in Sichuan and Yunnan, the production of silicon metal mainly uses caking silicon coal from Ningxia. The early shutdown of silicon plants in Sichuan and Yunnan has weakened the demand support for Ningxia silicon coal. Subsequently, the demand for Ningxia silicon coal will mainly be supported by silicon enterprises in north China.

The previous price increase by Ningxia coal washing plants was mainly driven by multiple increases in coking coal prices, which raised costs. To maintain costs, the coal washing plants increased the prices of silicon coal. However, the demand for silicon coal in Sichuan and Yunnan has already entered a weak phase and will continue to remain weak starting next month. Coupled with the recent stable operation of coking coal prices, the prices of silicon coal in Ningxia have also seen a weakened upward trend and are running stably.

Under the continuously weak silicon prices, production in the upstream and downstream segments of the industry chain is not easy. Coal washing plants are also struggling to produce around the cost line. However, the coking coal segment currently has insufficient momentum to raise costs due to weak and stable prices. Combined with the impact of low demand from silicon enterprises in south-west China, whether the prices of Ningxia silicon coal can rise again remains to be seen.