The silicon metal market in June 2024

1.Raw Material Market Review

This month, in the industrial silicon raw material market, only Taiwanese coke showed an upward trend, due to a decrease in supply. Other petroleum coke prices remained stable with no significant changes. Silicon coal and other raw material prices remained steady. Given the unpromising market outlook, factories primarily purchased raw materials based on immediate needs.

2.Metal Silicon Price Trends

This month, the price drop of non-oxygen 553-grade industrial silicon was themost pronounced. After the resumption of production in Sichuan, it became difficult to sell, leading to active price concessions. Recently, 99-grade silicon has seen active quoting, with some forward traders also offering competitive quotes. The price of 97-grade silicon dropped by 400-500 RMB/ton, but in cases where transactions could be made, the price was even lower. Some factories are maintaining operations due to necessary orders, but most factories have accumulated stockpiles, making it hard to sell, and some have plans to switch production or undergo maintenance. In Yunnan, some factories quoted high prices for low-grade industrial silicon, making it difficult to sell. The 3303# industrial silicon in Yunnan was also not moving at low prices. For chemical-grade industrial silicon, there were no significant new orders this month, with downstream demand focused on consumption.

3.Export Market

In May, China’s total export volume of industrial silicon products reached 71,787 tons, a year-on-year increase of 22,903 tons (46.85%) and a month-on-month increase of 5,154 tons (7.73%). From January to May 2024, cumulative exports of industrial silicon totaled 303,694 tons, up by 63,168 tons (26.26%) year-on-year. May’s exports exceeded expectations, primarily due to a sharp increase in shipping costs, motivating clients with earlier orders to expedite shipments. However, some exporters reported fewer orders in June. While foreign clients showed some interest, actual transaction prices were low, and exporters were cautious about taking orders due to the risks involved.

4.Production and Capacity Summary

In June, China’s industrial silicon production capacity was 728,460 tons, with 509,950 tons in operation, representing a capacity release rate of 70%, a month-on-month increase of 8.19%. Output was approximately 455,530 tons, a month-on-month increase of 49,530 tons (12.20%) and a year-on-year increase of 181,480 tons (39.84%). In June, 463 industrial silicon furnaces were in operation, up by 84 from May and by 202 from June last year. The operating rate was 66.43%, up by 11.58% month-on-month. The increase in June’s operating rate was primarily due to increased activity in Sichuan and Xinjiang, especially with 66 more furnaces operational in Yunnan. It is expected that the national industrial silicon output will reach approximately 480,000 tons next month, with 460-470 furnaces in operation.

5.Downstream Market

Aluminum Alloy Ingots: The price of aluminum alloy ingots declined this month. The aluminum market has entered the traditional off-season, with many small aluminum plants halting or reducing production, leading to a decrease in demand. Many intermediate traders have reported that the supply in June could be around half of that in May.

Silicones: The silicone market prices have already reached a relatively low level, so there has been little fluctuation. After the decline in the futures market, downstream buying sentiment is not strong, and it is expected that procurement prices will continue to be pressured lower in the future.

Polysilicon: The price of polysilicon experienced a slight decline this month and has fallen below the cost line, leaving limited room for further decline. The sales volume this month saw a slight improvement compared to last month, though it was not significant. Downstream wafer prices experienced a slight increase.

6.Forecast for Silicon Metal Next Month

Cost Side: Currently, raw material prices are generally stable and are not expected to show significant changes in the short term. In terms of electricity prices, Sichuan has entered the wet season, resulting in lower electricity costs and reduced production costs. Yunnan will also implement wet season electricity prices in July, further reducing costs next month.

Supply and Demand Side: This month, industrial silicon production continued to increase, primarily driven by Sichuan and Yunnan. Production in these areas is expected to continue increasing, and with no significant production cuts in the north, the process of inventory accumulation will likely continue. On the demand side, aluminum alloy ingots have entered the traditional off-season, with numerous shutdowns for maintenance. The demand for polysilicon has decreased compared to June, but some polysilicon factories plan to resume production after maintenance, leading to an expected slight increase in polysilicon demand next month compared to June.

Price Trend: Based on the supply and demand situation for industrial silicon and the actual downstream conditions, prices lack support. Although many factories have engaged in hedging, the oversupply situation remains difficult to change. It is expected that industrial silicon prices will continue to trend downward next month.