GLOBAL SILICON WRAP: Chinese export price rebounds; European, US markets upbeat
China’s silicon export price regained strength in the week ended October 13, while European and US market prices continued their strong ascents.
Silicon export prices in China rebounded amid the looming dry season, after having been under pressure for five consecutive weeks. During dry season, some refineries in southern China halt production as electricity costs are higher due to less hydroelectricity supply. Continuously rising production costs have also weighed on refineries margins.
China’s grade 553 silicon export price rose to $1,830-1,900 per tonne in Friday’s pricing session, up 2.8% from previously.
Rising raw material and power costs have put much pressure on refineries’ operations.
“Average domestic quotations for silicon grade 553 from refineries have been raised by about $50 per tonne since the start of this week,” an east China-based trader said.
Market sources estimate that as dry season approaches, the majority of refineries will have to bear an average additional cost of about 1,000 yuan per tonne of silicon due to greater expenditure on power and raw materials.
“The market is likely to experience a more severe supply tightness on electrodes [which is a raw material used to produce silicon] later this year; together with traditional operation curbs in southern China during dry season, the supply of silicon metal will be quite limited,” the eastern China trader said.
On top of that, environmental protection scrutiny continued to disrupt operations at refineries in southern China, according to market participants.
“Though the environmental inspection team had already completed the one-month supervision and inspection task by mid-September, local environmental protection watchdogs have extended the strict checks on silicon operations,” a southern China trader said.
Earlier in mid-August, inspection teams were sent to silicon production hubs in China, including Sichuan and Xinjiang province, which helped to push silicon export price to multi-years high at the beginning of September.
“As a result, quite a few refineries don’t dare to sign long-term contracts with export traders because they are afraid they would be unable to commit to the contract in the event of an environmental crackdown in the near future,” the same trader added.
On the other hand, there are quite high inventories in warehouses in China, according to market participants.
“It could be the result of a recent vacuum period for bookings; however, it is more likely that traders have stockpiled ahead of dry season in order to make profit when prices move up at a later stage,” the same southern China trader said.
Dumping duties push US silicon prices up
US silicon prices continued to rise in October due to preliminary dumping duties imposed on imports from Brazil, Australia and Norway.
US free market spot silicon prices were assessed at $1.26-1.29 per lb on Tuesday October 10, according to Metal Bulletin sister publication AMM.
This represents an increase of 2.8% from last month and is the highest level since July 2015.
“The anti-dumping investigations have been pushing prices up this year and there is no indication that this trend will stop in the short term,” one US silicon supplier said.
Since the beginning of 2017, silicon metal prices have risen 27.5% in the US market.
The US Department of Commerce announced last week affirmative preliminary dumping duties against silicon metal imports from Brazil, Australia and Norway.
US silicon imports from Brazil were hit with preliminary dumping margins of up to 134.92%, as was the case for producer Liasa. All other Brazilian producers received preliminary dumping margins of 56.78%.
Imports from Australia were charged dumping rates of 20.79%, while Norwegian imports were hit with a 3.74% tax.
“These are heavy duties, but the market sort of expected it, so prices have been increasing consistently since the beginning of the investigations,” one buyer said.
The dumping and countervailing duties probes began at the end of March following a petition by Ferroglobe.
The final determinations on the case are expected to be known by April 3, 2018, the commerce department said.
“These investigations are removing from the US market a significant volume of imports and this will continue to affect the prices well into 2018,” a second supplier said.
This scenario is also affecting the 2018 contract negotiations, which are delayed as the gap between buyers and sellers’ expectations are still quite wide.
“Under normal circumstances we would already have closed something for next year, at least for Q1, but at the initial levels that are being offered, we have no interest,” the buyer mentioned above said.
A second silicon buyer also reported a difficult start to contract negotiations, being “offered unrealistic numbers”.
European prices supported by strong demand
European prices moved up last week on higher demand and limited supply.
Metal Bulletin assessed grade 441 silicon, in-warehouse Rotterdam prices at €2,215-2,325 ($2,618-2,748) per tonne on Friday October 13, further up from the previous assessment of €2,190-2,300 a week ago.
Grade 553 prices rebounded to €2,150-2,200 per tonne on October 13, up 4.4% from previously.
“The market is still very strong with unexpected additional demand, but unfortunately we have very low inventory and can’t offer much right now,” a producer said.
“The Chinese are still not offering and it’s helping to move the prices up in Europe,” a trader said.
“I’m expecting this positive sentiment to continue in the short term,” a second trader said.