Low-grade Silicon Metal Prices Decline as Supply is Sufficient in North China and Enterprises are Active in Shipping

SHANGHAI, Feb 6 (SMM) - In the first trading week post Chinese New Year holiday, the overall transactions were thin despite the active inquiries of downstream enterprises. As of January 2, the prices of standard #553 silicon in east China lost 350 yuan/mt or 2% from January 20 to 16,800-17,200 yuan/mt, those of above-standard #553 silicon dropped 650 yuan/mt or 4% to 16,800-17,300 yuan/mt, those of #441 silicon fell 650 yuan/mt or 4% to 17,700-18,000 yuan/mt, and those of #421 silicon dipped 150 yuan/mt or 1% to 18,800-19,000 yuan/mt. The silicon metal market was weak before the Chinese New Year due to the high spot inventory and fund withdrawal. The post-holiday market of low-grade 5 and 6 series silicon extended the weakness in light of high inventory and weak demand as enterprises in Xinjiang and Inner Mongolia produced actively during the CNY holiday while downstream polysilicon enterprises were unwilling to accept high silicon prices and had weak demand for silicon powder (Si≥99%). Due to the frequent production suspension and higher costs of enterprises in Sichuan, Chongqing, the major producing regions, that mainly produce standard #553 silicon, the prices of some above-standard #553 silicon in north China were basically the same as the prices of standard #553 silicon. The prices of high-grade #421 silicon remained stable after the CNY holiday while some silicon companies raised their quotations. Affected by the extending weakness of low-grade silicon metal prices, cargo holders of #421 silicon were more willing to sell.

The supply of polysilicon increased further due to the continuous ramp-up of new production capacity. The prices of dense polysilicon rose to 200 yuan/kg boosted by the sharp rebound of polysilicon prices. The sharp rise in polysilicon prices did not affect the industrial silicon prices as the polysilicon enterprises still had strong demand amid the high profits. Secondary aluminium alloy enterprises gradually resumed the production. Some of them mainly digested their inventory, while others purchased on rigid demand. The actual transaction prices were generally low. The operating rates of silicone enterprises increased slightly, and the prices of DMC rebounded slightly. Many #421 silicon enterprises in Sichuan stopped the production. Coupled with the low qualified rate of raw materials in north China, the supply of low-titanium #421 silicon was tight, which was obviously different from the low-grade silicon metal market. The overall #421 silicon prices were stable after the CNY holiday and the bid prices stood at around 19,200 yuan/mt (delivery-to-factory).

The impact of power cuts in Yunnan expanded further, especially among the aluminium enterprises. According to SMM survey, the silicon metal enterprises were less affected as the power rationing towards them already began before the CNY holiday and remained unchanged at present. Large-sized enterprises in north China were active in shipping in light of high inventory. However, the downstream demand was not strong and the new orders were limited. Therefore, the silicon prices are expected to remain weak this week without upside momentum.