Silicon Metal Prices Dipped Further amid Panic Sentiment

SHANGHAI, May 12 (SMM)- As of May 12, prices of standard #553 silicon metal were 14,500-14,800 yuan/mt in east China, down 300 yuan/mt or 3% from a week earlier, prices of above-standard #553 silicon metal stood at 14,700-15,000 yuan/mt, down 350 yuan/mt or 3%, prices of #421 silicon metal were 16,200-16,500 yuan/mt, a drop of 150 yuan/mt or 1%. Silicon metal prices weakened again this week. Even as the lower operating rates of some silicon metal companies reduced the supply slightly, sluggish consumption from aluminium alloys, silicone and exports, coupled with the high inventories, continued to weigh on silicon metal prices.

The demand for silicon metal from polysilicon enterprises remained robust. According to SMM data, the domestic polysilicon production in April was 114,000 mt, an increase of nearly 3% month-on-month. Polysilicon has been slightly oversupplied and inventories are gradually accumulating. Some companies have planned to cut output in anticipation of falling polysilicon prices.

Average operating rate at primary aluminium alloy producers stood at 43.3% in April, down 0.4 percentage point from the previous month. That at secondary aluminium alloy plants fell 3 percentage points on the month to 56.1%. The sluggish terminal automobile consumption and fewer orders for aluminium alloys have hampered shipments of aluminium alloy ingots. This, combined with cash flow issues, forced some enterprises in east and south China to cut output or suspend production.

Production at silicone companies was also subdued. DMC prices moved lower to 14,300-15,100 yuan/mt, and most DMC producers are running at losses. According to SMM statistics, China’s DMC output in April was 158,000 mt, a month-on-month decrease of 6%. According to the production schedules of DMC plants in May, it is expected that the industry's operating rates may continue to decline slightly in May. Costs fell slower than silicon metal prices, keeping some silicon metal companies in losses. Some plants in north China were keen to sell amid great pressure. Factories in Sichuan are expected to resume production at the end of May or early June, and those in Yunnan are expected to resume production in June-July. Silicon metal prices are expected to stay at the current level next week. The market shall keep an eye on bid solicitations for silicon powder by polysilicon plants in late May.