Silicon Metal Finds Stronger Cost Support After Consecutive Declines; Focus on Realization of Polysilicon Production Cut Expectations [SMM Silicon Industry Weekly Review]

SMM, September 17: Silicon metal: This week, silicon metal futures and spot prices pulled back weakly. As of September 17, SMM oxygen-blown #553 silicon in east China stood at 9,300-9,400 yuan/mt, down 150 yuan/mt WoW; #441 silicon stood at 9,400-9,600 yuan/mt, down 100 yuan/mt WoW; and #3303 silicon stood at 10,200-10,300 yuan/mt, down 50 yuan/mt WoW. In the futures market, the SI2611 contract drifted lower during the week, consolidating downward from 8,745 yuan/mt at the start of the week, moving sideways near 8,500 yuan/mt mid-week, and closing at 8,445 yuan/mt on Thursday, down 300 yuan/mt WoW. In terms of market quotes and transactions, affected by bearish macro sentiment and growing expectations for polysilicon production cuts in Q4, silicon market sentiment was weak. Price centers among trading firms engaging in both spot and futures market moved lower. Silicon enterprises, facing limited inventory pressure, kept quotes largely stable. With price declines and downstream purchasing and stockpiling ahead of the two festivals, trading activity in the silicon market increased this week. Trading firms engaging in both spot and futures market saw smooth shipments, and combined with higher oil prices pushing up trucking freight costs, spot-futures price spread quotes strengthened in multiple regions.

Demand side, polysilicon operating rates remained stable this week. In the first 20 days of the month, some silicon powder and silicon lump purchase orders from polysilicon and milling enterprises were released, supporting silicon metal consumption demand during the week. Recently, there has been much market talk about polysilicon production cuts, but the timing and scale of the cuts remain uncertain. Going forward, focus on actual changes in polysilicon industry operating rates. Silicone operating rates edged up slightly during the week, mainly due to production resumptions at individual monomer plants, while other monomer enterprises kept operating rates largely stable. The silicone industry operating rate is still fluctuating around 60%. Silicone DMC was near 14,700 yuan/mt. In September, driven by rising raw material methanol prices, both the cost side and silicone product prices increased, and silicone enterprises maintained moderate profitability. Aluminum-silicon alloy enterprises saw operating rates increase slowly during the week. Entering the traditional peak consumption season in September, orders for automobiles, motorcycles, and related end-users improved marginally. Some enterprises maintained growth in orders, and production schedule enthusiasm among aluminum-silicon alloy enterprises recovered, driving operating rates to edge up. However, stricter tax invoice policies in some regions constrained production release. Going forward, monitor the realization of peak-season demand.

Overall, with growing expectations for polysilicon production cuts in Q4 and production resumptions at some silicon enterprises in the northwest, bearish market sentiment dominated and kept silicon metal prices in the doldrums. Although silicon metal fundamentals in September still show supply reductions MoM and slight inventory destocking, heightened downstream demand concerns kept prices under pressure. With the most-traded silicon metal contract falling to around 8,400-8,500 yuan/mt, cost support and buying interest below futures prices have strengthened, and prices may shift to consolidation. The subsequent trend will depend on whether expectations for polysilicon production cuts materialize, changes in operating rates at northern and southern enterprises on the supply side, and capital sentiment.

Polysilicon: This week, the polysilicon price index stood at 40.94 yuan/kg, with N-type recharging polysilicon quoted at 39.1-42.7 yuan/kg and granular polysilicon at 39-40 yuan/kg. Market quotes edged up this week, mainly because earlier production cut meetings boosted some participants' willingness to hold prices firm, reducing some low-priced resources in the market and lifting the price center. The market subsequently returned to stability, with overall transactions still dominated by sporadic deals as downstream continued to digest existing inventory.

Wafer: This week, wafer prices showed structural divergence. N-type 183 wafers were priced at 0.994-1.002 yuan/piece, 210R wafers at 1.027-1.039 yuan/piece, and 210mm wafers at 1.119-1.145 yuan/piece. After the previous rapid decline, 210N prices staged a phased recovery, but the overall supply-demand pattern has yet to show significant improvement. On the cost side, expectations for production cuts provided some support to polysilicon prices, but actual polysilicon transactions remain limited, and the extent of support for wafer prices still needs to be observed. On the supply side, supply remains higher than downstream demand, and enterprises still face shipment pressure. Wafer prices are expected to maintain structural divergence in the short term. Whether 210N can continue to rise will depend on downstream demand and inventory changes, while 183 wafers are likely to remain under pressure due to weakening demand outside China and soft domestic demand.

For more detailed market information and dynamics, or for other inquiries, please call 021-51666820.