Silicon Metal Production Cuts Improve Market Sentiment, Futures Trend Marginally Strong in Narrow Range [SMM Silicon Industry Weekly Review]

SMM August 6: Silicon metal: This week, silicon metal spot prices held steady while futures prices trended stronger. This week, silicon metal futures prices drifted higher; on Thursday, the SI2609 contract closed at 8,425 yuan/mt, up 255 yuan/mt from last Friday. In the spot market, SMM oxygen-blown #553 silicon in east China was at 9,000-9,100 yuan/mt, flat WoW, and #441 silicon was at 9,200-9,300 yuan/mt, flat WoW. During the week, futures prices stopped falling, stabilized, and rebounded. On the one hand, production cuts on the silicon metal supply side expanded further. Following some capacity cuts at the end of July, new production cut information emerged in Gansu, Ningxia, and other regions this week. Silicon metal production in August is expected to decrease by 9% MoM, while total silicon consumption on the demand side is expected to increase MoM. The fundamentals of decreasing supply and increasing demand improved significantly; market sentiment turned warmer, and bullish views increased. On the other hand, affected by downstream PV anti-involution policies, market trading sentiment leaned bullish. In terms of market transactions, silicon enterprises’ quotes were generally stable, with a few offering discounts to sell. Quotes from trading firms engaging in both spot and futures markets rose, low-priced resources in the market decreased, downstream users mainly made just-in-time procurement, and the trading atmosphere was mediocre.

On the demand side, polysilicon weekly production increased WoW, serving as the main driver of the growth in silicon metal consumption in August. Recently, policy or meeting news regarding polysilicon was abundant, and the specific impact on the industry still requires continued attention. Silicone enterprises’ operating rates underwent small adjustments this week. The silicone industry operating rate in July was around 61.4%. Silicone enterprises’ pre-sale orders were mostly scheduled for late August. Sentiment to hold prices firm was relatively strong, and DMC prices rose to 12,500-13,000 yuan/mt. Against the backdrop of production cuts and price support in August, attention should be paid to the actual implementation of silicone enterprises’ operating rates in the future. Aluminum-silicon alloy enterprises’ weekly operating rates remained weak. August is in the traditional consumption off-season. Primary aluminum alloy enterprises mainly scheduled production to deliver long-term contracts, and new spot orders were relatively limited, constraining operating rates. Secondary alloy operating rates stayed low, affected by downstream high-temperature holidays and insufficient tax invoices.

Overall, as supply-side production cuts improved silicon metal fundamentals, market sentiment turned better, and silicon metal prices stabilized and sought to edge up. Silicon plants mainly held prices firm recently, but sluggish new orders caused in-factory inventories to accumulate, increasing selling needs and putting resistance on prices. Recently, silicon metal futures prices mainly drifted higher, while spot price fluctuations were relatively limited.

Polysilicon: This week, the polysilicon price index was 32.66 yuan/kg, with quotes for N-type recharging polysilicon at 31.9-34 yuan/kg and granular polysilicon quotes at 31-32 yuan/kg. This week, polysilicon market prices were largely in a hold-back-from-selling state. General sentiment perceives that, affected by related policies and meeting expectations, there are strong expectations for future price hikes. From the previous costs of polysilicon plants, mainstream tier-one costs are concentrated at 38-42 yuan/kg. However, the cost calculation method and the definition of violations still need to await the results of subsequent meetings. Polysilicon production in August is expected to be 111,000 mt, with a significant increase due to production ramp-up in Sichuan and Inner Mongolia.

Wafer: This week, wafer prices were slightly revised downward. Among them, N-type 183 wafers were priced at 0.798-0.814 yuan/piece, 210R wafers were quoted at 0.897-0.914 yuan/piece, and 210mm wafers were quoted at 1.097-1.113 yuan/piece. This week, the upstream, affected by cost policies, began to hold back from quoting. Wafer shipments continued, but the price decline narrowed significantly. As of today, prices have basically approached stop-falling and stabilizing. Going forward, attention should be paid to the specific range of the next upstream polysilicon price quotation, to assess wafer costs and the basis for enterprises' price adjustments.

If you would like more detailed market information and dynamics, or have other information needs, please call 021-51666820.