Industrial silicon market supply-demand analysis

The price of industrial silicon remains stable, and the market is still in a state of depressed conditions. The trading sentiment of both upstream and downstream players continues to be under pressure, and the spot market as a whole continues to maintain a low-level stability. The supply and demand stalemate has not seen any substantial improvement, and the supply side has shown a reduction in production with a low willingness to lower prices. The consumption recovery has not met expectations, and downstream purchasing enthusiasm is poor, resulting in weak spot transactions and difficulty in alleviating inventory accumulation pressure.
Supply side: On the supply side, the market currently shows a marked contraction trend, which is mainly driven by multiple factors. First, Sichuan, a major industrial silicon production area, has seen a significant decline in output due to ongoing power rationing measures, which not only directly reduces local supply but also triggers widespread expectations of overall capacity reduction. Although the sustainability of the power rationing needs further observation, the suppression of output in the short term cannot be ignored. In addition, the rumored planned reduction in production by a large factory in Yunnan further intensified the tight supply sentiment, although the rumor has not been fully confirmed, which undoubtedly increased market uncertainty and made investors and purchasers more cautious about the current market environment. At the same time, other factories also face considerable operating pressure, although the reduced production intention in the southwestern region before the dry season is relatively low, the slight reduction in August production still reflects the challenges faced by the industry as a whole. However, it is worth noting that, despite the numerous unfavorable factors, the national industrial silicon supply level remains at a relatively high level, mainly due to the expansion of capacity in the previous period and the relatively high operating rate of northern silicon factories. However, in the long run, whether this high supply state can continue will depend on the power rationing policy, the planned reduction in production by large factories, and the changes in the overall profitability of the industry.
Demand side: Compared to the supply side, the demand side of industrial silicon is more complex. First, as one of the main downstream products of industrial silicon, the rapid decline in polysilicon production directly reflects the downturn in the photovoltaic industry, not only reducing demand for polysilicon but also putting huge operating pressure on enterprises along the entire industrial chain. In addition, the current continuous losses and high inventory problems of polysilicon enterprises further suppress their purchasing demand for industrial silicon. At the same time, the organosilicon market also shows a clear downward trend, although the output has been maintained at a high level in the early stage, but the decline this week indicates that the market demand is changing. The current low inventory of monomer plants slightly eases the supply pressure, but there has been no substantial increase in market demand. In addition, the planned unscheduled maintenance of monomer plants also leads to a slight decrease in the operating rate, coupled with the pressure of funds, daring not to buy in bulk, the purchasing demand for industrial silicon remains at the level of just-in-time demand.

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