As the year-end approaches, the prices of silicon metal raw material charcoal have recently dropped back slightly. The silicon market remains sluggish at the end of the year, and silicon producers in Baoshan, Yunnan, still have production cut plans in place. Overall, the demand for raw materials remains weak.
Due to weak demand from downstream silicon producers, charcoal traders have reported significantly lower demand compared to previous years. Some silicon producers in north China have completely abandoned the use of charcoal as a reducing agent this year. In Q4, a small number of silicon producers in south-west China also began switching to an all-coal process for smelting. With shrinking market demand, imports of charcoal have continued to decline, and currently, only a few silicon producers in Baoshan, Yunnan, are relatively stable in their use of charcoal for smelting.
Currently, silicon producers in south-west China are in the dry season, and overall operating rates in Yunnan remain low, with little short-term demand for charcoal procurement. Only silicon producers in Baoshan have relatively higher operating rates, but some producers in Baoshan are also planning production cuts and furnace shutdowns, further reducing demand for charcoal. As a result, the tender prices for charcoal in Yunnan have started to pull back this month.
At present, the delivery-to-factory price of dry-basis charcoal in Yunnan is around 2,900 yuan/mt. In 2024, charcoal prices are expected to fall below 3,000 yuan/mt by year-end. Although charcoal prices have fluctuated and declined throughout this year, they remain relatively higher compared to other carbon-based reducing agents. With a small number of silicon producers in Sichuan switching from charcoal to silicon coal for production in Q4, if silicon prices remain low next year, some silicon producers in south-west China may also switch raw materials to reduce costs. Under the influence of low silicon prices, the charcoal market is unlikely to see significant improvement.
