GLOBAL SILICON WRAP: Chinese export price rises to 15-month high; sparse trades in Europe
China’s silicon metal export price has risen sharply to a 15-month high over the past seven days; meanwhile, the European market has continued to see thin trading activity in the spot market.
China’s grade 553 silicon export price moved up to $1,630-1,680 per tonne on Friday August 4, up 3.1% from previously.
The domestic grade 553 silicon metal price rose another 100-200 yuan ($14.87-29.74) per tonne over the past week, leading to higher procurement costs for exporter traders.
Tight availability in the spot market persisted into the start of August despite the traditionally weak period for consumption in summer, following production disruptions in Sichuan and Xinjiang province amid environmental inspections.
“Due to the environmental inspections in Sichuan province, we have been told that delivery would be postponed as refineries could not run at full operational capacities,” a trader said.
On top of this, refineries’ nearby cargoes have been fully booked by large traders who are trying to push the price upward further by holding back from sales, market participants told Metal Bulletin.
“A large trader in southern China has stockpiled a large quantity of material and says it is not selling below 12,000 yuan per tonne,” the trader said. “It seems it won’t take long for them to achieve this goal.”
Meanwhile, after the completion of environmental inspections, there is expected to be more supply in the spot market, according to market players. However, most participants are uncertain about the price outlook.
“I think there will be more material coming to the market,” a second trader said. “However, it doesn’t necessarily mean the price will retreat.”
With such uncertainty on the price outlook, some traders are reluctant to make offers on enquiries for forward deliveries.
A couple of transactions have been concluded by Japanese buyers at about $1,630 fob China, with cargoes heading to Japan and Southeast Asia, Metal Bulletin understands.
However, Japanese buyers are still reluctant to accept the price hikes.
“The price rose too sharply,” a Japanese buyer said.
“It’s a very crazy market,” a second Japanese buyers said. “We would rather wait for the market to calm down.”
Alternative feed recently?
Faced with the unexpected and long-standing price rally on Chinese silicon metal since the start of this summer, some consumers expressed interest in exploring alternative feed, such as Brazilian silicon or cheap Russian material.
However, for neighbouring buyers, Chinese silicon is expected to be at the top of their list.
“We don’t consider countries other than China [to purchase silicon metal],” a Japanese consumer said.
“We have no choice, but to accept [the price rallies],” he added.
Brazilian silicon is less favoured, given the difficulty over risk management and uncertainty over whether smelters could adapt themselves to the non-traditional feed.
“It takes only one week for Chinese silicon to arrive at major Japanese ports. By comparison, it will take at least 40 days for a cargo to be shipped from Brazil to Japan,” a trader said.
“It means buyers need to take more risks when regional silicon prices fluctuate.”
European market sluggish
The silicon price was unchanged in Europe amid a sluggish market.
“We haven’t received any enquiries from Europe for quite a long time as they are on summer vacation,” a Chinese trader said. “In addition, current arbitrage is not in favour of them.”