Silicon Metal Prices Extended the Weakness amid Supply Pressure and Lack of Confidence in Market Outlook

SHANGHAI, Jan 13 (SMM) - The silicon metal prices extended the weakness this week. The prices of standard #553 silicon in east China lost 400 yuan/mt on a weekly basis to around 17,200-17,500 yuan/mt, those of #441 silicon fell 350 yuan/mt to around 18,400-18,600 yuan/mt, and those of #3303 silicon shed 350 yuan/mt to 19,000-19,200 yuan/mt. The orders increased on the rigid demand of downstream buyers and for export this week. However, silicon metal prices continued to decline under the pressure of ample supply and high inventory. The quotations of silicon metal plants fell into a wide price range, and silicon metals of different specifications and from different sources might be quoted the same. Some silicon metal companies sold off in order to relieve mounting inventory pressure and to ease financial pressure. Generally speaking, the silicon metal market was chaotic as a whole.

The operating rates of aluminium alloy enterprises declined as more secondary aluminium alloy producers were closed for holidays. Besides, these companies were not bearish on the silicon metal prices in the future, and stockpiled as normal. The operating rates of silicone enterprises dropped slightly due to the week-long maintenance of several monomer factories. The transaction prices of DMC rose slightly to 16,500-17,200 yuan/mt. It is learned that monomer plants will maintain normal production during the holidays. The operating rates of polysilicon enterprises were basically stable. As of January 13, the prices of dense polysilicon were 120-140 yuan/kg, and the high profits still motivated the enterprises to maintain high enthusiasm for production. The polysilicon output in January is estimated to gain 6% considering the release of new capacity.

As trans-provincial logistics and transportation began to slow down with the holidays drawing near, the priority will be given to transportation within the province. It is thus expected that the silicon metal market will be sluggish as if half-closed next week. As for the price trend after the holidays, the current supply of silicon metal is abundant, and is likely to add further as silicon metal companies will maintain normal production during the holidays. At the same time, there are still uncertainty surrounding the impact of the covid-19 on consumption in the short term. In this scenario, silicon metal prices lack enough momentum under the pressure from the supply side. Therefore, it is expected that silicon metal prices will mainly run at low levels, though a limited recovery is also possible resulting from cost support and downstream enterprises’ post-holiday stocking demand.