SMM Weekly Forecast on China’s Silicon Market

SHANGHAI, Sep. 3 (SMM) --

Supply

Operating rates at domestic silicon metal producers will recover steadily in the last two weeks of high-water period. Hengsheng Silicon Industry, the largest silicon metal producer will also resume production in the next week. Although ordered received by some silicon metal producers have booked till late September, supply of silicon metal will increase significantly due to higher operating rates at silicon metal producers in south west China.

Demand

Aluminum alloy industry will step out of traditional low-demand period, so its demand for silicon metal will recover; demand from organic and polysilicon industries will be sustainable robust in 2H 2010. Since the seasonal high water period will come to an end, some consumer will increase stock replenishments before the coming of low-water period for the concern that silicon metal prices may surge in the future.

Analysis

Current silicon metal prices are basically acceptable by downstream producers. As silicon metal only accounted for 7-11% of aluminum alloy production, prices of aluminum alloy will only be affected within RMB 100/mt. The price increase for organic silicon metal and polysilicon will help offset silicon price increase as well.

Forecast

SMM believes that mainstream traded prices of silicon metal at Huangpu port will be around RMB 12,400/mt for #553 silicon metal, will be around RMB 13,200/mt for #441 silicon metal, will be around RMB 13,700/mt for #3303 silicon metal and around RMB 14,300/mt for #2202 silicon metal in the following week.

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