Chinese metal silicon prices decline amid weak user demand

Chinese metal silicon prices are once again experiencing a decline. Despite strong demand for polysilicon in solar power generation, user interest in purchasing has waned due to increased use of aluminum alloys and a downturn in organic silicon utilisation. As a result, speculators' buying support has hit a ceiling, leading to a drop in commodity prices by approximately $200/tonne (t) from late March to April.

Current export prices (FOB) show reductions across various silicon grades: "2202" is now priced at $2,500-$2,600/t (down $50/t from mid-January), "3303" at $2,020-$2,070/t (a decrease of $180-$190/t), "441" at $1,960-$2,000/t (down $210/t), and "553" at $1,880-$1,930/t (a decline of $180-$200/t).

Despite abundant inventories, the market price began to decline in late March after remaining relatively stable from January to mid-March, with only slight declines. Silicon production volume stood at 1,048,000 t in January-March increasing by 146,000 t compared to the same period last year, and further production increases are expected as major manufacturers plan to ramp up production in April following difficulties in February-March due to power restrictions and winter drought periods.

While demand for semiconductors and polysilicon for solar panels remained robust, sales for aluminium alloy additives and organic silicon are sluggish, contributing to a decline in overall buying interest. It remains uncertain whether annual demand will meet the market forecast of 3.9 million tonnes (mnt), compared to 3.15 mnt in the previous year.

Traders had been buying in the futures market in anticipation of increased demand for polysilicon, keeping the market stable until mid-March. However, recent price declines of about $200/t suggest weakened demand for non-polysilicon products. There's a risk of further market instability unless demand improves or coordinated production cuts are implemented to maintain profitability.