Silicon Metal Spot Prices Remain Stagnant, Supply and Demand Expectations Both Weak in December [SMM Silicon Industry Weekly Review]

SMM Nov. 27: Silicon Metal: Spot silicon metal prices maintained a narrow fluctuating and largely stable trend this week. As of Nov. 27, SMM oxygen-blown #553 silicon in east China was at 9,500-9,600 yuan/mt, flat WoW; #441 silicon was at 9,700-9,800 yuan/mt, flat WoW; #421 silicon (used in silicone) was at 9,800-10,200 yuan/mt, flat WoW. In the futures market, the most-traded SI2601 contract fluctuated within the range of 8,950-9,200 yuan/mt this week, and closed at 9,115 yuan/mt on Thursday afternoon, up 40 yuan/mt WoW. In terms of transactions, domestic downstream inquiries and deals were weak. After suppliers raised spot quotes, some downstream buyers showed resistance, with downstream generally maintaining a low-price purchasing mentality.

Demand side, silicone operating capacity increased slightly this week, mainly due to production resumptions at a few monomer units after maintenance. According to the earlier joint production cut and price support plan in the silicone industry, silicone monomer capacity is expected to see production cuts and a lower operating rate starting Dec. 1. Market participants will monitor the actual production schedules of silicone enterprises next week. The polysilicon weekly operating rate decreased WoW. Polysilicon enterprise production schedules for December are expected to be mixed compared with November, with limited expected reduction in silicon metal consumption. The weekly operating rate of aluminum-silicon alloy enterprises was basically stable WoW, and the December operating rate is projected to dip slightly MoM but remain higher than the year-ago level, mainly supported by relatively solid end-use demand from automotive orders.

Supply side, a new round of seasonal production cuts occurred in Sichuan and Yunnan regions around late November and early December, leading to a narrowing trend in total silicon metal supply. Both supply and demand were weak in December, with the theoretical industry inventory buildup further narrowing, and the supply-demand balance may show a tight balance. The short-term silicon metal price is expected to maintain a fluctuating stalemate. Next week, as silicone monomer enterprises implement joint production cuts to support prices, on one hand, the silicone production cuts will create a bearish impact by reducing silicon metal consumption; on the other hand, the cuts may push DMC prices to rise slightly again, and profit transmission along the industry chain could stimulate bullish sentiment in the silicon metal market. The tug-of-war between longs and shorts will focus on changes in capital sentiment.

Polysilicon: The polysilicon price index was 51.9 yuan/kg this week. N-type recharging polysilicon was quoted at 49.7-55 yuan/kg, and granular polysilicon was quoted at 50-51 yuan/kg. Polysilicon prices were largely stable overall, while the downstream market saw frequent price cuts, with overall sentiment slightly pessimistic. Top-tier polysilicon enterprises held a firm stance on supporting the market, keeping prices unchanged for the time being.

Wafer: Overall wafer prices declined this week, with N-type 183 wafer prices at 1.15-1.2 yuan/piece, 210R wafer offers at 1.2-1.25 yuan/piece, and 210mm wafer offers at 1.5-1.55 yuan/piece. Wafer enterprise prices fell again this week, with average prices for all sizes dropping to cash costs, and low prices even falling below cash costs. The logic that wafer price reductions cannot stimulate more demand has become clear; current prices are due to a price collapse, and some enterprises with tight cash flow are eager to dump wafers to recoup funds. Wafer production is expected to be significantly cut in December, and the strategies adopted by enterprises with and without materials will change.

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