Post-holiday silicon metal market activity gradually recovers, focus on changes in operating rates on both supply and demand sides [SMM Silicon Industry Weekly Review]

SMM February 26 News:Silicon Metal:In the first working week after the Chinese New Year holiday, downstream users of silicon metal mainly inquired about prices and made limited essential restocking purchases. Trading firms engaging in both spot and futures market offered prices actively, while most silicon enterprises maintained stable quotes from pre-holiday levels and adopted a wait-and-see approach. As of February 26, SMM oxygen-blown #553 silicon in east China was at 9,200-9,300 yuan/mt, #441 silicon at 9,300-9,500 yuan/mt, and #3303 silicon at 10,200-10,400 yuan/mt. On the export front, overseas users showed active inquiry activity after the holiday, but price competition remained intense. In the futures market, the most-traded contract weakened on Thursday afternoon, finally settling at 8,335 yuan/mt, with the contract fluctuating between 8,330 and 8,495 yuan/mt during the week. Most silicon enterprises held a wait-and-see stance after the holiday, keeping their offers stable. However, with futures prices at low levels, trading firms engaging in both spot and futures market actively offered prices and made shipments, and the market transacted based on demand.

Demand side, polysilicon enterprise operating rates remained stable compared to pre-holiday levels, as polysilicon enterprises maintained normal production during the Spring Festival. A small amount of polysilicon capacity is expected to resume production in March, but the increase is limited, so demand for silicon metal showed mild growth. Silicone enterprise operating rates increased compared to the Spring Festival period, but the silicone industry operating rate remained at a relatively low level. There is some upside room for a slight rise in the silicone operating rate going forward, and expectations for silicon metal consumption are stable with a potential increase. Aluminum alloy enterprise operating rates increased compared to the week before the holiday, with most secondary aluminum alloy enterprises resuming work between the eighth and fifteenth days of the first lunar month. Over time, the overall operating rate of the aluminum alloy industry is expected to gradually recover to normal pre-holiday levels.

Cost side, prices of raw materials such as silica and silicon coal were basically stable, and silicon metal production costs remained stable. Supply side, silicon enterprise operating rates were basically stable compared to pre-holiday levels. Some production resumptions are expected in Xinjiang in early March, and the industry still holds expectations for an increase in silicon metal supply in March. Demand side, post-holiday operating rates are also gradually recovering. Most industry inventory is concentrated with trading firms engaging in both spot and futures market. Low-grade spot prices maintained a premium structure against futures, and futures fluctuations directly affected spot prices. Recently, silicon metal spot prices are expected to fluctuate at lows, and continued attention should be paid to the pace of changes in operating rates on both the supply and demand sides.

Polysilicon:This week, the polysilicon price index was 51.45 yuan/kg, with N-type recharging polysilicon quoted at 48-56 yuan/kg and granular polysilicon at 49-51 yuan/kg. Polysilicon prices dipped slightly this week. At the beginning of the work resumption period, influenced by downstream market sentiment, most manufacturers' price expectations lowered, with some directly reducing prices by around 2 yuan. Downstream, affected by costs and futures, prices are expected to drop to around 50 yuan/kg. Some enterprises have not yet officially quoted prices at the initial stage of production resumption, but overall market sentiment is clearly bearish. In March, polysilicon production may increase due to the number of days and the resumption of production at individual bases.

Wafer: Wafer prices remained stable this week, with N-type 183 wafers priced at 1.1-1.15 yuan/piece, 210R wafers quoted at 1.2-1.25 yuan/piece, and 210mm wafers quoted at 1.4-1.45 yuan/piece. The main reason for the stable range of wafer prices this week is that low-priced orders have been digested, and wafer enterprises have entered a wait-and-see period. Currently, raw material prices show a downward trend, and wafer enterprises have recently focused their strategy on reducing procurement costs. At present, enterprises need to use stockpiled materials for production to cover wafer cash costs, but this trend is difficult to sustain long-term. In the short term, wafer prices may follow raw material prices downward. However, after entering March, the trend of battery production increases and module price rises has become increasingly clear, the pace of wafer inventory buildup has slowed, and there may be a slight destocking in March, which will support the rapid consolidation of wafer prices at lows.

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