Silicon Metal Prices Showed Signs of Further Decline after Short-term Boost amid Rising Supply and Weak Demand

SHANGHAI, Dec 14 (SMM) - The prices of silicon metal with different specifications demonstrated different moving directions in November. As of November 30, the prices of 421# silicon metal in east China recorded 32,750 yuan/mt, down 26,000 yuan/mt or 44% in the month. And the transaction was also light due to conflicting upstream and downstream positions on price moves. The prices of metallurgical-grade silicon metal, especially low-grade ones, moved rangebound in November. For example, the prices of 553# silicon metal with oxygen dropped from 31,500 yuan/mt in early November to 22,500 yuan/mt, and then rose to 27,250 yuan/mt after a full week’s rising. The prices weakened again later in the month due to lack of upward momentum.

The metallurgical-grade silicon metal prices rose in mid-November mainly due to the rising orders from downstream aluminium alloy manufacturers, powder plants and polysilicon companies as the silicon metal prices dropped below the acceptable prices of some silicon plants, who began to hold the prices firm, caused by the previous wait-and-see sentiment across the downstream sector on falling silicon metal prices since October. The reason for the rapidly falling silicon metal prices after the rise partly lies in the fast weakening downstream demand after the concentrated restocking demand was fulfilled. Meanwhile, the operating rates of silicon metal manufacturers in south-west China were high than estimate as the production in Yunnan was less affected by the energy consumption control. Lastly, the traders’ sell-off actions also weighed on silicon metal prices.

On the supply side, the domestic silicon metal output peaked at 300,000 mt in November throughout 2021, and the social inventory was also higher than the same period last year amid high supply. However, the production is likely to be reduced or suspended in mid-December amid short electricity supply in the dry season, rising electricity costs and falling silicon metal prices. The operating rates are likely to drop further by end of December. On the demand side, the operating rates of aluminium alloy and polysilicon manufacturers rose slightly in November after the power rationing drew to an end. Some silicone companies also completed their routine maintenance in November or December. The downstream mainly purchased on rigid demand in light of volatile silicon metal prices, and their inventory was mostly at a lower level compared with the past years. The silicon metal prices are likely to move downward in December, but may welcome a slight increase by the end of the month amid accelerated production reduction caused by continuously falling prices, changing downstream purchase logic and support from the cost side.