In early July, the metal silicon market showed a broad upward trend, with profits in the southwest region being restored, silicon factories gradually resuming production, and some insulation furnaces in the northwest large factories also resuming production. Manufacturers have made significant price increases. By July 12th, silicon prices had surged due to news of a major factory’s production reduction. Subsequently, it immediately fell back, and the market’s once hyped expectation of high temperature power rationing was falsified. At the same time, the downward revision of Xinjiang’s major manufacturers’ quotations dragged down market sentiment. Southwest manufacturers have a high sentiment of favoring prices, but downstream actual transactions are not good, suppressing the price of metal silicon.
Market analysis
On the supply side
The southwest has entered a flood season, and the electricity prices in Sichuan and Yunnan have decreased by 0.075-0.05 yuan/ton. The electricity prices in Xinjiang have slightly increased. In July, the resumption of production in Yunnan accelerated, and towards the end of the month, due to the impact of the Universiade, partial power restrictions were imposed in Sichuan, but the impact on metal silicon enterprises was limited. Large factories in Xinjiang are purchasing electricity from external networks, and the cost of electricity prices has increased. However, the current situation of large factories in Xinjiang is good, and small and medium-sized factories are gradually resuming production. In August, the precipitation in the southwest increased, and driven by profits in the northwest, it is expected that the metal silicon production in August will slightly increase compared to July.
Inventory aspect
As of July 28th, the total inventory of metal silicon in the three regions was 163000 tons, an increase of 8000 tons compared to the end of last month, or 53.8% year-on-year. In July, metal silicon continued to accumulate inventory. On the one hand, downstream procurement capacity was weak, mainly consuming invisible warehouses; On the other hand, as the delivery date approaches, the number of delivery warehouses continues to increase, and some delivery warehouses in Kunming, Yunnan have reached full capacity within the month.
In terms of demand
In July, the price of polycrystalline silicon slightly rebounded at the end of the month. After the continuous decline of polycrystalline silicon in the early stage, some polycrystalline silicon enterprises ceased production and underwent maintenance at the end of the month. However, the new production capacity continues to be released, and the demand for metallic silicon remains stable.
In July, organic silicon DMC showed a weak decline, with many monomer factories increasing their production reduction efforts. However, downstream demand has not boosted significantly, and it is expected that organic silicon will maintain a weak operation in the short term. Aluminum alloy enterprises maintain a rigid demand for metal silicon procurement, but the significant positive impact of policy on the real estate and automotive industries at the end of the month is expected to increase the demand for metal silicon for aluminum alloy in August.
Future Market Forecast
In August, metal silicon may face a situation of double increase in supply and demand. Despite the increase in metal silicon production, it still faces high inventory pressure and insufficient short-term action in silicon prices. However, with the release of new polysilicon production capacity and the improvement of demand margins, there is support for the downward trend. It is expected that metal silicon will maintain a volatile trend in August.
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