Silicon Metal prices stabilized in China and rose slightly in the U.S. due to tight supply, firm demand, and trade probes, despite weak raw material costs and softening downstream polysilicon activity.
Amid steady production levels in China and tightening supply conditions in the U.S., the Silicon Metal market showed signs of stabilization and slight price gains. While raw material costs eased and demand from some downstream sectors softened, U.S. prices edged up on constrained supply and trade policy developments, hinting at a potential short-term uptrend.
Key Takeaways:
China
For the week of June 6-13, Silicon Metal production in Xinjiang held steady, yielding 31,670 mt at an unchanged 65% operating rate. While proprietary inventories at producers notably declined, there's still potential for Xinjiang's operating rate to increase going forward. Silicon Metal inventories in key regions saw a slight decline of 2,000 metric tons this past week, settling at a total of 587,000 metric tons on June 5.
Silicon Metal production costs saw downward pressure in the week. The raw material markets for Silicon Metal, i.e., silica and silicon coal were sluggish, with limited trading and falling prices for silicon coal. Despite strong coking coal futures, spot coking coal prices are weak, impacting silicon coal. Manufacturers are carefully managing supply to avoid inventory buildup.
Demand from the polysilicon market is winding down, with limited transactions and ongoing competition. For wafers, May saw minor production adjustments, reaching about 58.06 GW domestically. June wafer output dropped due to cuts at several specialized firms, leading to subdued market activity, cautious buying, and largely stable, slightly fluctuating inventories.
Silicon Metal spot prices held steady in the second week of June. Downstream buyers showed strong resistance to higher Silicon Metal prices, though fewer low-priced cargoes were available, pushing some transaction centers upwards. Looking ahead, Silicon Metal demand is poised to increase as operating rates in downstream polysilicon and DMC markets are expected to rise slightly. The spot Silicon Metal market has stabilized after recent declines, suggesting short-term consolidation is likely.
The USA
The USA saw a 0.5% week-over-week increase in Silicon Metal prices by June 13. This rise stemmed predominantly from tightened production and the influence of antidumping investigations on incoming shipments.
The Silicon Metal market in the USA is experiencing dual supply pressures. Firstly, Ferroglobe PLC in Ohio has announced Force Majeure due to storm-induced power outages, impacting short-term supply. Secondly, a federal investigation indicates that Silicon Metal imports from Australia, Laos, and Norway are harming the U.S. industry, prompting consideration of countervailing duties or import limits.
Global container shipping rates, a factor for Silicon Metal's import cost, show stability this week, with Drewry's World Container Index holding at $3,543 per 40ft container. This stability marks a reversal of earlier declines, stemming from a sudden, short-term improvement in the container shipping supply-demand balance.
