SMM Weekly Forecast on China’s Silicon Market

SHANGHAI, Dec. 31(SMM) --

Supply:  

Silicon metal producers relying on thermal-power and restricted by energy conservation and emission reduction regulation will gradual resume production in 2011, as a new five-year plan period will begin.  Producers using hydropower in Sichuan, Chongqing and Fujian will gradual halt production as water supply will be extremely low in January.

Demand:

Demand from overseas markets like Japan and South Korea will be weak and export market will be quiet due to New Year holiday. In addition, aluminum alloy producer, the largest silicon metal consumer, has already replenished stocks before holiday, leading to sluggish domestic demand.

Analysis:

Some silicon metal producers in Yunnan province stockpiled goods for higher prices in the future, as some domestic traders believe that overseas demand will recover in mid-January. Given that short-term demand was sluggish, prices will be temporarily stable. However, prices are expected to improve in late January as overseas consumers will replenish stocks before China’s Traditional New Year holiday.   

Forecast:

SMM believes that mainstream traded prices will be around RMB 13,600/mt for #553 silicon metal, around RMB 14,700/mt for #441 silicon metal, around RMB 15,300/mt for #3303 silicon metal and around RMB 16,200/mt for #2202 silicon metal. 

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