Silicon Industry Branch: Supply contraction in the industrial silicon market is clear, demand disturbances are expected to be dominated by shocks in the short term
The Zhitong Finance App learned that the Silicon Industry Branch published an article stating that the industrial silicon market is in a game stage where “supply contraction continues to be realized, cost support is strengthened, inventory is accumulating and falling” and “expectations of polysilicon production cuts are disrupted.” The effects of production cuts by major factories in Xinjiang continue to be unleashed. The rise in coking coal prices has strengthened support on the cost side, and the signal for storage removal is clear; however, expectations of polysilicon production cuts are heating up, and market concerns about the demand side have intensified, putting pressure on the market in the short term. If production cuts exceed expectations, pressure on the demand side of industrial silicon will be further evident; if production cuts are delayed or moderate, market sentiment is expected to recover, and prices are expected to fluctuate mainly in the short term.
Market performance: futures fluctuated and declined, and spot stocks continued to operate steadily
In terms of futures, the fluctuation of the main 2611 contract increased markedly this week. At the beginning of the week, the market had already digested the benefits of earlier production cuts. The combined profit market settled. The market declined from around 8,945 yuan/ton to around 8,740 yuan/ton from September 7 to 8. Since September 9, boosted by rising coking coal prices and inventory removal, market sentiment has recovered, and prices have rebounded to the 8800-8945 yuan/ton range. On the afternoon of September 10, news of polysilicon production cuts went viral. Market expectations on the demand side weakened. The market declined from a high level, and the main contract closed at 8,745 yuan/ton.
On the spot side, according to Antec's September 10 quotation statistics, the comprehensive price of industrial silicon nationwide was 8,976 yuan/ton, the same as last week. By specification, 553 #报8754元 /ton, 441 #报9022元 /ton, and 421 #报9435元 /ton were all the same as last week. Looking at the subregions, the comprehensive prices in Xinjiang, Yunnan, and Sichuan were 8,824 yuan/ton, 9,681 yuan/ton, and 9,750 yuan/ton respectively, all the same as last week. In terms of export FOB, prices are the same as last week.
Judging from the transaction situation, spot prices have been running steadily, but actual downstream demand is weak. Most of them consume early inventory, new purchases are limited, and transactions are still dominated by small orders that are just needed. Some manufacturers have strong prices or are reluctant to sell; current sellers are also unwilling to pick up goods. Actual market circulation is limited, and buyers and sellers continue to compete while prices remain stable.
Supply side: Production cuts continue to be realized, and supply contraction is clear
The most important change on the supply side this week is that the effects of production cuts by major manufacturers continue to be unleashed. In the southwest production area, the abundant water season has come to an end, and the supply center continues to decline. In terms of the main production areas in northwest China, production in Inner Mongolia, Gansu, Ningxia and other places is basically the same as last week. The overall increase is limited, making it difficult to offset the decrease in supply caused by production cuts in major factories in Xinjiang. At the same time, the focus of industrial silicon production costs is also rising — the price of coking coal continues to strengthen, and the price increase of silicon coal is beginning to be transmitted; electricity prices are still expected to rise during the dry water period in the southwest; the petroleum coke market is active in trading, and prices continue to rise. Due to the combination of multiple cost factors, production costs in the Xinjiang region gradually rose to more than 8,900 yuan/ton, further consolidating the bottom price support.
Demand side: Polysilicon production cuts are expected to heat up, silicone remains high in price, aluminum alloy just needs to be purchased
There were new changes in the demand-side table this week. On the afternoon of September 10, news broke in the market that polysilicon companies were basically determined to cut production, and the start of polysilicon production capacity that had previously been planned to resume production was also delayed. Expectations of polysilicon production cuts are heating up, directly impacting confidence on the demand side of industrial silicon.
In terms of polysilicon, the polysilicon market showed a “priceless” pattern this week. Although spot prices remained in the 40-43 yuan/kg range, actual transactions were extremely limited. If production cuts are implemented, Polysilicon's procurement of industrial silicon will shrink further. However, it should be noted that the current procurement of polysilicon for industrial silicon itself is already in a state of “passive replenishment”. The increase is already limited, and the marginal impact of production cuts may be less than the reaction of market sentiment. In terms of silicone, the overall operating rate of the industry was 62.9%, flat from month to month, and silicone DMC prices remained stable. Due to recent cost increases, companies are more willing to raise prices, maintaining the level just needed for industrial silicon procurement. In terms of aluminum alloy, orders from downstream die-casting companies are expected to be repaired seasonally, but actual demand recovery is moderate. Companies maintain immediate procurement of industrial silicon, and demand has not changed much from month to month.
