Tug-of-war between longs and shorts, spot silicon metal price remains stagnant [SMM Silicon Industry Weekly Review]

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SMM News on June 19:Silicon Metal:

This week, spot prices of silicon metal remained rangebound, while futures prices showed relative strength. In the spot market, SMM's oxygen-blown #553 silicon in east China was priced at 8,000-8,300 yuan/mt, unchanged WoW. #441 silicon was priced at 8,400-8,600 yuan/mt, unchanged WoW, and #421 silicon was priced at 8,400-9,000 yuan/mt, also unchanged WoW. In the futures market, the closing price of the main SI2509 contract for silicon metal today was 7,470 yuan/mt, up 15 yuan/mt WoW. Futures prices fluctuated within the range of 7,300-7,500 yuan/mt this week. Recently, market transactions were mainly based on spot purchases at futures prices, driving a continuous decline in silicon metal warrant data. As of June 19, silicon metal warrants stood at 55,179 lots (275,895 mt), down 3,193 lots (15,965 mt) WoW. From the perspective of social inventory, some goods were transferred from factory warehouses to social inventory, with the destocking rate of social inventory falling short of the reduction in warrants.

The operating rate of polysilicon enterprises on the demand side remained largely stable. There have been many discussions recently regarding polysilicon production increases or self-regulated production restrictions, leading to strong uncertainties in the future operating rates of polysilicon enterprises. Some polysilicon tender powder orders were released, with low-price transactions of #99 silicon powder outside Xinjiang at 8,300 yuan/mt. The operating rate of silicone enterprises increased slightly. In June, the demand for silicon metal from silicone enterprises exceeded 110,000 mt, an increase of approximately 10,000 mt MoM. DMC was traded at a low price of 10,200 yuan/mt during the week, approaching the industry's cost line, placing significant procurement pressure on monomer plants. The operating rate of leading enterprises in the aluminum-silicon alloy sector remained basically stable, with procurement of silicon metal maintained on a need-based basis. Orders during the week decreased slightly WoW.

On the supply side, silicon metal production continued to increase. On the one hand, large plants in Xinjiang rapidly increased production. Rough calculations suggest that after production stabilizes, daily output is expected to increase by around 1,500 mt compared to before this round of production increases. On the other hand, a small number of silicon enterprises in south-west China have gradually resumed production, driving an increase in silicon metal output. Attention should be paid to the impact of the "production restrictions to stabilize prices" meeting in the PV industry on the operating rate of polysilicon enterprises on the demand side. Some silicon enterprises are refusing to budge on prices or are unwilling to sell at a loss. Therefore, despite significant supply-side pressure, recent market spot liquidity is supporting current silicon prices, leading to intense tug-of-war between longs and shorts. Attention should be paid to changes in market sentiment.

Polysilicon:This week, the price index for N-type polysilicon was 34 yuan/kg, with N-type recharging polysilicon priced at 33-36 yuan/kg. Polysilicon prices continued to decline, with the mainstream price of mixed polysilicon dropping to around 33 yuan/kg. Czochralski crystal pulling enterprises are still influenced by polysilicon market conditions and their own costs, maintaining a mindset to drive down prices. Meanwhile, polysilicon enterprises are still facing inventory challenges, and two new production/resumption bases may be launched in early July. Currently, the market perceives a high probability of increased polysilicon supply in the future. The market will continue to monitor the production resumption situation in Inner Mongolia.

Wafer: This week, the price of N-type 183mm wafers is 0.88-0.92 yuan/piece, 210R wafers is 1.03-1.07 yuan/piece, and 210mm wafers is 1.23-1.28 yuan/piece. Wafer prices have slightly weakened, with some 183mm wafer prices falling below the 0.9 yuan/piece threshold at the beginning of the week. The low prices were mainly concentrated among small and medium-sized factories, and the current market sentiment remains pessimistic. There have been no significant changes in wafer production schedules in June. Top-tier enterprises may have intentions to cut production, but the scale is currently limited. End-use demand remains weak, and the future supply-demand relationship will continue to be the main market challenge.

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