For the Quarter Ending March 2023
During the first quarter of 2023, the US Silicon Metal market experienced a decrease in market sentiment due to caution amid disruptions in the domestic financial market. In response to higher capital costs, inventory drawdowns, and a decline in earnings, many chip companies reduced headcount, cut costs, and deferred capital expenditures. In February, downstream buyers reported a drop in new orders due to a combination of inflation and slower economic growth, which put pressure on demand from both domestic and export customers. However, despite the decline in demand, downstream enterprises and traders were still hesitant to restock, and high inventory pressure persisted. As a result, the silicon metal prices in March hit their lowest level since early June 2022. With a weak macroeconomic backdrop, manufacturers believe that silicon metal prices are unlikely to recover anytime soon. They claim that financial market volatility has disrupted the supply chain. Therefore, the Silicon Metal (5-5-3) prices for FOB San Diego were fixed at USD 2787/MT.
During the first quarter of 2023, the European Silicon Metal market showcased a bearish market sentiment due to limited buying interest from the downstream aluminium alloy sector. This factor weighed on spot liquidity in domestic regions. Despite seasonal decreases in demand in January, the silicon market did not show any noticeable price fluctuations in Europe, as the situation in the energy market stabilized following a relatively mild winter and successful diversification of energy sources. However, Silicon Metal prices in Europe increased in February 2023, resulting from production cuts and shipment delays for some products. There were no discernible price fluctuations in the market during the second week of March, and transaction costs remained unchanged since the beginning of March. The traded volumes in the area were limited, with mostly hand-to-mouth bookings for small lots reported lately. European silicon producers found it challenging to compete against lower-cost third-country imports and other local suppliers liquidating their positions. Consequently, the Silicon Metal (5-5-3) prices for CFR Hamburg settled at USD 3122/MT.
During the first quarter of 2023, the Chinese Silicon Metal market experienced a decrease in market dynamics due to a surplus inventory level amidst a sluggish downstream Steel market. In January, some Silicon Metal enterprises raised their offers in response to firm offers from leading enterprises and price increases from downstream producers. However, during the Chinese New Year holiday, the market was quiet, and logistics services were suspended. Mainstream steel mills were inclined to raise prices due to high costs, putting traders under pressure and dampening their profits. In February, despite the expectation of downstream and terminal companies to restock in advance, terminal demand remained low, which decreased the momentum for silicon spot prices. The electricity tariff in Guangxi was raised in March, which, combined with low demand, dampened the enthusiasm for production. Silicon metal plants in Yunnan, Sichuan, and other regions trimmed or halted their production due to mounting cost pressure, while others took a wait-and-see approach. As a result, downstream buyers kept their raw material inventories at a low level, and Silicon Metal prices for FOB Shanghai settled at USD 2270/MT and USD 2652/MT.
For the Quarter Ending December 2022
During the last quarter of 2022, the US Silicon metal prices showcased a stagnancy in their price trend owing to the stable supply-demand outlook. In terms of supply, most businesses were lowering their operating costs. Several manufacturers reduced operating rates, while others planned to reduce production loads and slow capacity ramp-ups in December to address excess inventory caused by oversupply. However, because there is a delay in companies lowering their operating rates, prices will not be significantly impacted in the short term. Weak demand combined with Christmas holiday leave overseas, as well as sales returns in markets such as the US, has some module manufacturers lowering the prices of some of their products faster. With falling prices for upstream silicon materials and wafers, the industry expects prices to fall further next year and module prices to fall even further.
In the final quarter of 2022, Silicon metal prices were consistently due to sluggish demand and limited supply amid logistical constraints. Due to another rise in covid cases in China, specifically in Xinjiang, power rationing in Yunnan province, and the impact of futures listings, there were few changes in the Silicon metal prices. Meanwhile, several market participants reported that the demand from downstream remained mostly rigid. Towards the end of the year, Chinese authorities relaxed covid protocols amid rising protests against city-wide lockdowns, resulting in improved production rates in Xinjiang but weak demand from downstream polymers and elastomers along with aluminum alloy markets.
In the first half of Q4 2022, Silicon Metal prices remained on a bullish rally. Under the strong support of the cost side (semi-coke, electricity, and transportation costs increased), the Silicon Metal spot market has been operating steadily. During the second half of the quarter, the German Silicon Metal market showcased a stagnancy in the price trend. According to market participants, Europe's silicon market has been characterized by volatile spot trades supported by weak demand from the aluminium sector. With China's unpredictability, European buyers sought to limit market exposure and avoid building extensive inventories. The market has been weighed down by a bleak economic outlook and a slew of headwinds affecting Europe's manufacturing and construction industries.
For the Quarter Ending September 2022
In the US market, Silicon Metal prices continued to fall in Q3 2022 due to a demand-supply imbalance caused by imports and steadily falling raw material prices. The United States' import sources expanded to include Brazil, Canada, Russia, Venezuela, and others. However, market participants reported that Chinese Silicon was insignificant. Market participants cite that cost pressures remained high at the end of the third quarter, with reports of supply chain issues, raw material shortages, and skyrocketing prices for key inputs such as energy and electronics. Market participants believed that Silicon prices in the United States had flattened, with near-term sentiment gradually improving, though the overall tone remains cautious. As a ripple effect, the Silicon Metal (5-5-3) prices for CFR San Diego (USA) settled at USD 3020/MT.
The price trend of Silicon Metal in the Asian market has been stagnant during the third quarter of 2022. According to market participants, the cost of Silicon Metal in July was lower than expected. Manufacturers have established production and maintenance schedules. Some traders believed that the price did not meet their expectations, and they were waiting with bated breath for ferrosilicon purchase demand. Furthermore, raw material costs have fallen, and profits are gradually returning. Because of the abundance of resources in circulation, downstream enterprises are concerned about the market outlook. Due to active shipment, the inventory of Silicon Metal at Huangpu Port was reduced, while the stock at Tianjin Port remained stable. Furthermore, the downstream purchased as needed at the end of the quarter, and some traders tended to stockpile cargo in advance. Cargo holders raised the price of Silicon several times in September, primarily because the market was concerned about production restrictions and shipment issues amid the Xinjiang pandemic. Thus, the Silicon Metal (5-5-3) prices for FOB Shanghai (China) settled at USD 2530/MT.
During the third quarter of 2022, the Silicon Metal prices in the European market plummeted due to an abundance of inventories in the regional market and limited demand. According to market participants, Silicon Metal prices have remained stable this year due to higher-than-expected European purchase volumes and limited polysilicon supplies due to seasonal mill closures. According to buyers, power and gas prices in Germany have more than doubled in just two months. Temporary shutdowns have occurred in the past due to high costs. As prices rise, many energy-intensive companies competing on a global scale are feeling the pinch. Customers are paying more because silicon companies are substituting liquefied petroleum gas and coal for up to 40% of German gas volumes. As a result, the market experienced a stable demand outlook. Therefore, the discussions for Silicon Metal (5-5-3) prices for CFR Hamburg (Germany) settled at USD 3115/MT.
For the Quarter Ending June 2022
Due to fluctuating demand, Silicon Metal prices in the North American market witnessed mixed sentiments. During April, the unprecedented surge in the global crude and energy prices soared the quotations for Silicon in the overseas market. However, the sanctions on Russian commodities and COVID-19 resurgence in China further reduced the demand dynamics in May and June. However, rising inflationary pressures, weak buyer confidence in the outlook, and supply-chain disruptions have increased Silicon prices in June. Firms utilized their current holdings of inputs and finished goods to supplement production, with input buying stagnating and supply chain delays easing. According to market players, relief may come later this quarter, with production expected to ramp up and ease supply tightness.
During the second quarter of 2022, the Silicon Metal prices witnessed plunging sentiments in the Chinese market due to weak demand and delayed downstream procurement. According to market participants, the domestic Silicon metal market was sluggish following the May Day holiday, and market transactions were poor, resulting in a drop in Silicon metal prices. Recently, export prices have fallen, and trade has been light. Because of the sluggish domestic Silicon metal market, overseas buyers were more cautious about placing orders. Furthermore, the rapidly changing yuan exchange rate is a significant reason for Silicon metal export prices falling. Again, most silicon factories resumed production in late May, with some continuing into early June. Some silicon factories actively delivered sufficient orders, while others suspended citations or quoted high due to a lack of willingness to sell.
In the European market, Silicon Metal prices witnessed mixed sentiments in the Q2 of 2022. Due to the unusual sanctions limiting Russian business export opportunities, Silicon metal prices continued to rise in April. Soaring electricity prices and energy costs in Europe have two-folded the impact on the demand outlook in the regional market. Furthermore, due to European restrictions on Russian and Belarussian transportation companies, silicon prices have skyrocketed. However, by the end of April, the market's growth in Silicon quotations had slowed due to a sharp decline in demand. Lower demand and increased supply, rather than reduced supplies from Ukraine, caused the segment to be overstocked and prices to fall. However, during June, suppliers attempted to speculate on higher prices in China, but by the end of the month, they were forced to give in once more.
In North America, Silicon prices were soaring in response to Russia-Ukraine conflict. High rates of electricity and upstream materials like silica, petroleum coke, soft coal, charcoal resulted in price fluctuations. However, in first quarter of 2022, the leading import sources for US Silicon metal were Germany, Taiwan, and Vietnam. The Chinese domestic demand for US Silicon weakened as Chinese market players adopted wait and see approach due to inflated prices. Despite soaring market prices of Silicon amid tight spot availability, producers and traders decided against and made their offers and are keeping their stock steady. The price for Silicon in North America during the first quarter of 2022 were settled at USD 957-1058 per tonne.
During the first quarter of 2022, the Asian market sentiments for Silicon in March showcased upward growth despite a declining trend followed till February 2022 owing to muted demand from consumers. Amidst this, the extended hostilities between Eastern European nations have drastically impacted the trade dynamics and provoked fear of a steep surge in prices among domestic market players, forcing them to build up inventories. In India, Silicon prices soared due to high domestic demand and an upswing in prices of raw materials, primarily coal and coke. However, Indian suppliers largely benefited from the crisis and raised their offers subsequently for better netbacks. India's imports of Russian Silicon increased by 250% m-o-m in January. Major buyers have plenty of inventories and are unwilling to sell at low prices. Moreover, domestic buyers are reluctant to book materials at higher prices, waiting for the price reduction. The Silicon Metal price for Ex-Mumbai (India) settled at USD 4209 per tonne, whereas for Ex-Shanghai (China) was assessed at USD 3208 per tonne.
The ongoing conflict between Russia and Ukraine led to the whole value chain and supply chain disruption. Prices of the materials witnessed a sharp rise due to this conflict. In Europe, the prices of Silicon in January rose moderately amid a shortage of material and forwarding delivery and lower manufacturing at plants because of inflated raw materials costs. Moreover, Russia is the world’s second-largest manufacturer of Silicon after China. In the first quarter of 2022, Russia’s Silicon export demand remained bullish. However, the suspended supplies from Russia severely impacted the global market and the European nations significantly. The sanctions imposed on Russia caused domestic European buyers to build up their stocks from other countries. Additionally, Russia’s export declined primarily due to the drop in imports from Japan and Turkey. But India’s imports of Russian Silicon surged more than 200% m-o-m because of the higher domestic price of Silicon in January 2022.