Charcoal Prices Struggled to Rise, Prices of New Orders in September Continued to Fall [SMM Analysis]

Under the influence of the weakened silicon metal market, most raw material prices have also dropped this year. Charcoal prices have been volatile and declining since 2024, and prices of new orders in September from south-west China continued to decrease.

Due to the significant use of charcoal in silicon smelting by silicon companies in south-west China, domestic charcoal traders primarily supply the silicon companies in south China. Monthly or long-term orders for large silicon companies have a significant impact on the market's charcoal prices.

This year, the silicon metal market has been in a long-term downturn. Although it is the rainy season in the south-west, by the end of August, some silicon companies in Sichuan and Yunnan had already reduced production or shut down their furnaces. These companies indicated no plan to resume production. Traditionally, this period is the peak season for charcoal demand, but due to the early weakening of downstream operations, overall demand is not as strong as in previous years. Additionally, some charcoal traders imported large quantities of charcoal from Laos and other Southeast Asian countries at the end of last month, resulting in an increase in charcoal supply at ports. With a growing supply but slightly weaker demand from silicon companies, coupled with silicon companies currently operating at a loss, the acceptance of raw material prices has decreased. In September, silicon companies in Baoshan, Yunnan, saw charcoal traders continuously undercut each other in bidding, causing new order prices for charcoal to fall further. The dry settled price has dropped to 3,150 yuan/mt.

A small number of silicon companies in south-west China still plan to reduce production or shut down furnaces in September. Some charcoal traders have indicated that due to the thin profit margin and weakened demand forecast, they have recently stopped importing large quantities of resources and only provided small amounts of charcoal regularly to their long-term cooperative silicon companies.