Stockpiling of Silicon Industry Chain Players amid the Approaching National Day Holiday

SHANGHAI, Sep 30 (SMM) - Silicon metal prices were firm this week. In east China, prices of standard #553 silicon metal were 19,800-20,100 yuan/mt, up 450 yuan/mt or 2% WoW, and those of above-standard #553 silicon metal stood at 20,900-21,200 yuan/mt, up 450 yuan/mt or 2% on the week. #3303 silicon metal was quoted at 21,700-21,900 yuan/mt, up 350 yuan/mt or 2% WoW, and #421 silicon metal (for silicone) was quoted at 21,700-22,000 yuan/mt, up 450 yuan/mt or 2% on the week. Production cut that was adopted in Yunnan province, thus quotes from silicon metal factories were raised several times. In the first half of the week, traded price kept rising owing to the downstream pre-holiday restocking. In the second half of the week, traders became cautious in purchasing but were more willing to ship amid the end of downstream restocking, the high silicon metal prices, and fears among aluminium alloy and silicone manufacturers, thus the silicon metal prices stabilised.

On the demand side, the operating rates of secondary aluminium alloy producers stayed stable, while those of primary aluminium alloy manufacturers grew slightly. The pre-holiday restocking was basically over, and the release of new orders slowed down. Most of the secondary aluminium alloy companies are going to have a holiday of about 3-4 days during the National Day holiday, and those that maintain operation will slow down the production. Most silicon monomer companies faced the risk of expanding losses as the DMC prices fell to 17,500-18,500 yuan/mt as of September 29 and the spread between DMC and #421 silicon metal expanded inversely. Polysilicon enterprises maintained high operating rates. As the new production capacity of polysilicon, such as GCL, will be put into production in October, the demand for silicon metal will boom.

In the first week after the National Day holiday, it is expected that most downstream companies will remain wait-and-see, and some cargo holders will reduce their prices slightly to clinch a deal. The high silicon metal prices will continue to suppress the silicone industry. Moreover, supply instability still exists in Sichuan and Yunnan during the dry season. In general, the silicon metal prices will remain stable in the short term after the National Day holiday, while prices of some specifications may be slightly reduced. The market shall pay attention to the progress of the new production capacity of silicon metal and polysilicon.