In late April, China’s silicon metal market stayed under pressure, with prices for key grades like 4-4-1 and 5-5-3 continuing to fall. Sluggish demand, cautious buying, and slow sales among producers have all weighed on the market. At the same time, new capacity from major projects is expected to help in balancing the supply side.

Key takeaways:

• Both 4-4-1 and 5-5-3 silicon metal grades faced declining prices and weak demand in late-April, with limited buying activity
• The trial production at Baoshan’s 100,000 mt project marks a significant capacity expansion, balancing out production declines at older facilities and helping stabilize overall supply.

The domestic spot market for 4-4-1 silicon metal has been generally soft and declining since April began. This weakness is mirrored on the supply side, where some silicon metal producers faced slow sales and overall supply pressure, leading to reduced operating rates and less incentive to produce.

Demand for silicon metal 4-4-1 was tepid, with buyers showing caution and slow follow-through on transactions, offering weak support to the market. Cautious purchasing behavior among end-users of silicon metal 4-4-1 translated to sluggish demand and transactions occurring primarily at lower price levels, offering little support.

The 5-5-3 silicon metal market continued to show weakness, with spot prices finding a fragile bottom after previous declines. Demand from end-users remained tepid, with transactions limited to immediate needs, resulting in a quiet market. This lack of robust demand, alongside the pressure from lower-priced alternatives, constrained the operational activity of silicon companies as April drew to a close.

On the production side, Xinjiang's silicon metal plants showed steady output this week, producing 27,790 metric tons and operating at 57%, unchanged from the previous week. With no immediate plans to reactivate curtailed production, the region's silicon metal operating rate has remained largely consistent.

Northwestern China's sampled silicon metal producers yielded 10,640 metric tons this week, operating at 78% capacity, a marginal week-over-week dip. Meanwhile, Yunnan's sampled enterprises maintained their prior week's 22% operating rate, producing 1,890 metric tons.

The Chinese silicon metal market witnessed a key event this week with the startup of the first electric arc furnace at Baoshan's massive 100,000 mt project, now in trial production. This new capacity is anticipated to offset potential production cuts at older facilities in May, resulting in relatively stable overall supply.

Looking forward, China's silicon metal supply in May is predicted to see a minor overall increase. Sichuan's newly commissioned and restarted facilities are set to boost its output. However, Yunnan's production is likely to fall due to operational adjustments and the inactivity of idled plants. The near-term silicon market is expected to remain stable at low levels, requiring close monitoring of supply and demand shifts.