Silicon Prices Rose in Feb amid Falling Supply in Dry Season and Concentrated Restocking Demand

SHANGHAI, Mar 8 (SMM) - Supply: Some silicon plants in Guizhou, Guangxi and Shaanxi resumed the production in February, while some in Hunan did not until early March. A few silicon plants in Fujian carried out maintenance one after another by end of February, resulting in slightly low operating rates. The plants in Sichuan reported both growth and reduction in output. The operating rates were low as a whole in February. The silicon plants in Yunnan maintained low operating rates, and those in Xinjiang lowered the operating rates due to environmental protection requirements, and returned to normal production by end of February. Output increment was mainly contributed by 421# silicon metal.

Demand: Silicone manufacturers held higher operating rates compared with the pre-CNY holiday level, while the silicone capacities put into production before the Chinese New Year (CNY) also reached full production, resulting in robust demand for silicon metal. Polysilicon manufacturers maintained higher operating rates on brisk demand, and the demand for silicon metal was stable. Aluminium alloy manufacturers mostly resumed the production around February 8, and returned to pre-holiday level in mid-February. The operating rates are expected to rise further in March amid rising orders for primary alloy.

Bullish factors: Rising prices of petroleum coke, electricity and downstream products

Bearish factors: More silicon plants will resume the production in Hunan and Nujiang in March, lifting the supply; social inventory is high compared with previous years

SMM analysis: Silicon metal prices rose by around 2,000 yuan/mt throughout February, suppressing the downstream demand as most downstream players were still consuming the stocks. Nonetheless, silicon plants held firm to their prices amid bullish outlook. The operating rates in March are expected to see both growth and reduction, and the overall output will be slightly higher that in February. As such, silicon prices are expected to rise slightly and then stand stable amid the mixture of bullish and bearish factors in March should there be no emergencies on the supply side.

Others: According to data from the China Association of Automobile Manufacturers, in January 2022, the overall automobile output and sales were stable, with a decline MoM and modest growth YoY. New energy vehicles still performed prominently and maintained rapid growth YoY. In January 2022, automobile output and sales recorded 2.24 million and 2.53 million units respectively, down 16.7% and 9.2% MoM, and up 1.4% and 0.9% YoY.