SMM

Silicon prices began to fall in January after keeping hiking in December 2023. On the one hand, rising spot price of silicon metal by nearly 1,000 yuan/mt in December 2023 kept downstream users in wait-and-see mood, making a big dent in orders. On the other hand, the most-traded silicon metal futures contract fell more than expected from 14,000 yuan/mt in early January to 13,000 yuan/mt, making market sentiment pessimistic. Meanwhile, purchase price of 421# silicon metal based on futures prices was better than offers from spot silicon metal plants. Downstream traders,grinding plants and polysilicon producers turned to 421# silicon metal, thereby lessening silicon metal plants’ orders. Therefore, spot prices of silicon metal declined. As of February 7, prices of standard 553# silicon were 14,700-14,800 yuan/mt (-250 yuan/mt MoM), 14,900-15,100 yuan/mt for above-standard 553# silicon (-550 yuan/mt MoM) and 15,300-15,700 yuan/mt for 421# silicon (-300 yuan/mt MoM). Price spread between high and low specifications kept narrowing.
With the arrival of the Chinese New Year holidays, transactions were muted in early February. Some silicon metal plants with need for pre-holiday funds sold off goods, while most were in optimistic wait-and-see mood, and kept offers stable. There will be a slow drop in inventory in January-March. Before the holidays, silicon metal plants in north China were still profitable, while those in south China mostly suffered losses. From late February to early March, intensive stockpiling may boost spot prices of silicon metal, but the hike will be limited amid inventory pressure from warehouse receipts.