[Minor metal] SMM Forecast - Domestic Silicon Market

SHANGHAI, Aug. 14 (SMM) -- Silicon market remained strong during this week, with possibility silicon prices will surge further.

    As to market fundamentals, supply and demand changes are not enough to support silicon prices to move up. On the one hand, market supply recovered gradually with increased operating rates at factories; on the other hand, domestic downstream consumers purchased stably, and traders also finished their stock replenishment, so market trading volumes reported no significant increases.

    At present, two major factors help support market prices: costs and exports. Prices for petroleum coke increased constantly, and are expected to climb further in the near future. Meanwhile, local governments in Hunan and Fujian provinces stopped implementing preferential policy for electricity price during high-water period. In this context, increased costs help improve factory confidence in price hike. Orders, especially long-term orders increased on export market, and overseas traders have accepted higher prices, with FOB prices at RMB 1,700/mt, which also create limited upward room for silicon prices.

    In the short term, any upward room for silicon prices will be limited given existing inventories at traders and weak transactions. In addition, current demand for high-grade silicon was limited, with narrowed price spread among different brands, which will likely exert downward pressure on silicon prices.

    In summary, SMM believes prices for #553-2202 silicon will be in the RMB 9,500-10,500/mt range next week.

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