More purchases lower silicon social inventories in north China

SHANGHAI, Aug 27 (SMM) – More purchases on lower prices shrank silicon social inventories in north China this month, while stocks accumulated in the south. This came after supplies resumed in Sichuan and Yunnan provinces from June as the rainy season began. 

While silicon plants in Yunnan, Sichuan, and Chongqing raised offers in mid-July, lower-priced materials in the north China market attracted greater interest from traders and downstream buyers domestically and abroad. 

Specifications of #553 and #551 with oxygen in the north saw short supplies, traders told SMM last week. A large plant in the north sold all of its backlogged inventory, with the majority of its orders received for lower-grade products. 

On exports, most Chinese traders made advanced shipments in July for orders scheduled for early August, due to the uncertainty of customs policy. While deliveries cooled in Huangpu port in Guangdong province this month, cargoes departing Tianjin port continued to exceed arrivals as purchasing enthusiasm from overseas buyers grew. 

At the largest warehouse of Tianjin port, silicon inventory fell 75% from the start of August, to some 2,000 mt in metal content as of Friday August 24. Stocks typically stood at 6,000-8,000 mt in metal content at this warehouse, SMM learned. 

The proportion of products in Tianjin port warehouses for domestic sale also rose to a third last week from one-tenth before July, SMM learned. Products were delivered to the nearby Shandong and Hebei. In Tianjin, cargoes that arrived from Xinjiang spent little time in warehouses, while high-grade products spent a little more time, SMM learned. 

When northern plants raised offers to match that in the south, trades in the north did not decline significantly as of August 24, as downstream users were more inclined to continue their purchase from previous sources given a reasonable price range. The growing influence of Xinjiang, with its cost advantage and the biggest silicon capacity in China, also contributed the firm trades, SMM believes. 

As of August 24, social inventories of silicon across Huangpu port, Tianjin port, and Kunming rose 29.2% from a year ago, to 84,000 mt in metal content, SMM data showed. Commissioning of new capacity has grown silicon social inventories from the start of the year. Faster growth in supply than demand will continue to buoy domestic inventories, SMM believes.