The Demand for Silicon Metal is Tight

Due to production costs being higher than current selling prices, most producers reduced or halted production in April, resulting in tight supply in the Chinese spot market. Firm supplier offers are supporting prices, but demand remains subdued. Currently, the mainstream price of Chinese Silicon Metal 3-3-03 is hovering around 14,200-14,500 CNY/MT (1,961-2,002 USD/MT) delivered to main ports, unchanged from the weekend before. Given the tightening spot supply, industry insiders predict that next week the mainstream price of Silicon Metal 3-3-03 in China will increase.
A producer from Yunnan revealed that due to high production costs and lower selling prices, they were running two furnaces in March but only one in April. The producer stated, "I am currently quoting Silicon Metal 3-3-03 at 14,000 CNY/MT (1,933 USD/MT) EXW cash, without any concessions, although I haven't closed any deals yet. Last Thursday, I sold 60 MTs at 14,300 CNY/MT (1,975 USD/MT) delivered to Huangpu, including freight of 400 CNY/MT (55 USD/MT)." They added that their current production cost is above 14,500 CNY/MT (2,002 USD/MT), and they cannot reduce prices; some nearby factories have already ceased production this month. Anticipating a tightening spot supply, they expect the mainstream price of Silicon Metal 3-3-03 to rise next week. The producer has an annual production capacity of about 17,280 MTs of Silicon Metal, with an estimated production of around 700 MTs in April, a decrease of about 700 MTs from the previous month. They hold minimal inventory. The producer operates two 12,500kVA furnaces, with one currently in operation.
A trader from Fujian revealed that this week, they could hardly find any supply in the spot market as most of their suppliers had suspended production in April. The trader mentioned, "I usually can source enough supply from one or two suppliers, but today I asked five regular suppliers, and due to shortages, none of them provided a quote." They added that a new supplier quoted 14,500 CNY/MT (2,002 USD/MT) delivered to Huangpu without any concessions, and they have not made a purchase yet. Last week, they bought 60 MTs at 14,200 CNY/MT (1,961 USD/MT) delivered to Huangpu. Anticipating continued shortages into early May, the trader expects a slight increase in the mainstream price of Chinese Silicon Metal 3-3-03 next week. The trader typically handles a monthly volume of 500 MTs of Silicon Metal, but with active inquiries stimulating demand, they expect to sell around 800 MTs in April, an increase of about 300 MTs from the previous month. Their trading volume in 2023 was around 6,000 MTs.

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