Spot supply tight; silicon metal prices stagnant and stabilizing ahead of the holiday [SMM Silicon Industry Weekly Review]

SMM, September 30: Silicon metal: This week, spot silicon metal prices held steady in a stalemate. As of September 30, SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, flat WoW; #441 silicon was at 9,500-9,600 yuan/mt, flat WoW; #3303 silicon was at 10,200-10,400 yuan/mt, flat WoW. In the futures market, the SI2611 contract moved sideways within a narrow range this week. With only three trading days before the National Day holiday, it pulled back to around 8,470 yuan/mt on Monday before stabilizing, then consolidated upward supported by accelerated inventory destocking and tight spot liquidity, closing at 8,565 yuan/mt on the last trading day before the holiday, up 35 yuan/mt from last Friday. In terms of market quotes and transactions, as the National Day holiday approached, market trading activity slowed this week. Silicon suppliers kept quotes basically stable, downstream users picked up goods intensively before the holiday, social inventory continued to decline, low-priced cargoes in the market tightened, spot silicon metal liquidity was tight, and downstream users mainly stockpiled as needed before the holiday with limited willingness to chase higher prices. The price center held steady in a stalemate.

Demand side, polysilicon enterprises' operating rates were basically stable this week. In September, thanks to higher operating rates at some polysilicon enterprises, polysilicon demand for silicon metal rose about 11% MoM. With seasonal production cuts during the dry season, combined with polysilicon plants' stance of cutting production to hold prices firm, October polysilicon operating rates face expectations for production cuts, with October volume possibly down nearly 20% MoM. Silicone weekly operating rates edged up slightly as individual monomer plants raised loads. With expectations for dry-season production cuts, some monomer plants increased raw material silicon metal stockpiling. In September, silicon metal consumption from the silicone sector edged down MoM. October silicone production schedules remain unclear, with the direction possibly being a slight increase. The operating rate of industry leaders in the aluminum-silicon alloy sector edged down slightly, mainly affected by the Mid-Autumn Festival and National Day holidays. A small number of enterprises had 1-3 days of production stoppage for the holidays. As the holidays end, aluminum alloy operating rates will return to normal levels.

Supply side, SMM data shows September silicon metal production at 317,000 mt, down 11% MoM. In September, different silicon metal enterprises saw both increases and cuts in operating rates, but the reduction at large plants in Xinjiang had a broader impact. Overall, September production showed a decline. For October, considering the production release from capacity that resumed production in the north in September, combined with expectations that southwestern production cuts will mostly occur in late October or at month-end, October silicon metal production is expected to increase MoM. The theoretical balance for silicon metal is expected to show slight destocking, with the extent narrowing from September.

Overall, silicon metal prices stabilized in a stalemate before the holiday this week, with both futures and spot fluctuations narrowing significantly. The fundamentals of silicon metal remain in a tight supply situation, coupled with cost support from silicon coal, electrodes, and freight, keeping silicon metal prices firmly supported. Market views on post-holiday trends are divided. If major northern producers do not significantly increase production in Q4, silicon metal is expected to see continuous destocking in Q4. After the holiday, attention should be paid to operating rates on both supply and demand sides and capital movements in futures.

Polysilicon: This week, the polysilicon price index stood at 41.08 yuan/kg, with N-type recharging polysilicon quoted at 39.6-42.5 yuan/kg and granular polysilicon at 39-40 yuan/kg. Market quotes edged up slightly this week, mainly driven by large-order transactions from a few top-tier players in the latter half of the period. The number of transactions remains weak, and both upstream and downstream players maintain a wait-and-see sentiment. In October, expectations for polysilicon production cuts are significant, with production expected to drop nearly 20% MoM, mainly due to production cut meetings and the dry season. The reductions are mainly in the southeast, Inner Mongolia, and Xinjiang.

Wafer: This week, wafer prices remained stable. N-type 183 wafers were priced at 0.994-1.002 yuan/piece, 210R wafers at 1.026-1.044 yuan/piece, and 210mm wafers at 1.119-1.145 yuan/piece. As the holiday approaches, pre-holiday stockpiling has largely concluded, with strong wait-and-see sentiment on both sides and a decline in actual market transaction activity. Overall, wafer prices are expected to remain stable in the short term. Future attention should focus on polysilicon price changes, the recovery of downstream procurement after the holiday, and the pace of wafer inventory destocking.
 

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