Amid Short Supplies, Silicon Prices in China Refreshed This Month

With the pandemic outbreak in many Chinese cities, the transportation and logistics of finished products and raw materials were curbed in China, further declining the downstream production rates in the domestic market. The weak demand outlook from buyers has ushered in the downfall of silicon prices. These prices plunged narrowly after considering a few factors such as high expense and the financial issues for most domestic producers.

According to the local suppliers, the drift in Silicon prices was primarily due to strong demand from the downstream sectors in the first quarter of this year. The production of silicon wafers, cells, and components from January to February grew from 40% to 55% year-on-year. China's photovoltaic products (silicon cells, modules, and wafers) increased by 100%. The release of recent Silicon capacity fell to meet rising demand, leading to a supply shortage.

Many aluminium alloy factories hampered the production activities in downstream industries due to transport and logistics disruption, inadequate orders, and yields caused by the pandemic in China. Additionally, some Silicon plants reduced the production rates due to epidemic. Most of the downstream polysilicon plants in the domestic market operate at full capacity, whereas some small-scale industries are undergoing maintenance.

Local market Silicon metal suppliers claim that they are inclined to selling more because the May Day holiday is arriving near, but downstream manufacturers are not keen to pile up the stock due to pessimistic market sentiments and sufficient inventory. Thus, they expect the Silicon metal prices to be greatly stable this week. Also, the production of polysilicon factories in Sichuan and Xinjiang will plunge slightly in April owing to the small-scale maintenance. More than 50,000 MT of new capacity at three polysilicon factories ramped up in April slower than anticipated.

As per ChemAnalyst, "As soon as the current pandemic situation comes under control, the silicon prices are predicted to climb slightly as the consumption will increase from the downstream players. The spot market supply-demand dynamics will only be eased after June opening a new capacity. Until then, Silicon prices may persist, running high."