Market Prices Continue to Decline, Silicon Coal Still Has Downside Room [SMM Analysis]

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The silicon coal market for silicon metal raw materials remains weak, with prices in certain regions continuing to decline recently. The overall coal market sentiment has been pessimistic, which has similarly affected the performance of silicon coal.

However, the recent price drop in silicon coal is mainly attributed to the dual impact of weak market conditions for downstream silicon metal plants and sluggish demand. Earlier, when leading silicon coal plants in Ningxia adjusted prices, some coal washing plants in Gansu and Ningxia did not follow the price cuts. The main reasons were unsatisfactory orders at present, the high likelihood of weak silicon coal demand in the short term, and the lack of profit margins in the coal washing segment. As a result, some plants opted to stabilize silicon coal prices temporarily, waiting for the upcoming rainy season, which could bring a wave of demand recovery for silicon coal as silicon plants in south-west China resume production. However, due to the extremely weak performance of the silicon metal market this year, the resumption of production by silicon plants in south-west China during the rainy season remains uncertain. Additionally, a small number of operating silicon plants downstream are facing significant losses, leading to low production enthusiasm, limited restocking willingness for raw materials, and very low price acceptance. Consequently, silicon coal prices in Gansu could not hold steady and had to follow the downward trend, dropping by 60 yuan/mt.

The weak downstream demand has had a significant impact on silicon coal prices this year. Although current silicon coal prices have fallen to their lowest levels in recent years, apart from the strong price support for non-caking silicon coal in Xinjiang due to high operating rates and strong demand from large downstream silicon plants, most silicon coal plants in other regions have expressed that future silicon coal prices remain highly uncertain. Under the prolonged weakness of the silicon industry and the continued weakness of the overall coal market, silicon coal prices are likely to face further downside room.