GLOBAL SILICON WRAP: Chinese prices dip lower on weak demand; European prices steady

China’s silicon export price fell at the end of last week, weighed down by weak demand and high inventory levels, while European prices were stable with the commencing of annual long-term contract negotiations.

Chinese grade 553 silicon metal export prices moved back on both ends of the range, settling at $1,840-1,900 per tonne on Friday November 3, slightly down from $1,850-1,910 one week ago. 

The domestic Chinese silicon price remained steady, though cheaper materials entered the spot market as a result of some suppliers attempting to lower their inventory levels.

Sources reported numerous quotations that were 100-200 yuan ($15.15-30.30) per tonne lower than mainstream offer prices in the spot market.

Suppliers had a weaker hand in price negotiations, possibly due to sluggish demand from the traditional downstream market over the winter, market sources told Metal Bulletin.

The aluminium alloys sector, a large consumer of silicon metals, slowed their inquiries after showing some buying appetite in mid-October on the return from China’s National Day holiday.

The sudden change of attitude towards raw materials procurement by aluminium alloys producers might be the result of worse-than-usual demand downstream, some market participants told Metal Bulletin.

Chinese aluminium alloys producers had started to build up stocks of raw materials to prepare for the busiest time of year. Yet actual demand from their customers turned out to be weaker than before. Consequently, aluminium alloys producers are less likely to carry out more silicon purchases now until they clear up existing inventories.

With domestic quotations on silicon steady, silicon metal export prices struggled to keep up earlier momentum.

“However, once the refineries raise their quotations, the export price will follow,” a trader said.

That said, it is not likely that domestic silicon suppliers will break the deadlock in the very near term, due to the high inventories, weak demand and stable raw material costs to produce silicon metals.

Additionally, overseas demand has not picked up greatly since late September because Japanese buyers are not yet prepared to make procurements for the first quarter of 2018, and European traders are waiting until they have a better idea of annual long-term contracts between producers and consumers.

One of the largest traders in Japan has released a couple of small-tonnage tenders in the past three weeks, but the trading firm did not award the tenders to any Chinese suppliers, Metal Bulletin understands.

Rather than securing suppliers with more competitive prices outside China, it is believed the Japanese buyer actually has not bought anything and decided to wait and see how prices develop after witnessing the cap in the mild rally in China’s silicon export price that took place in early October.

Seeing this stance, a couple of export traders are willing to sell cheap to take advantage of quick gains, Metal Bulletin understands.

“We can sell bit cheaper as long as we’re certain that we won’t lose money,” a second trader said.

“We bet on the exchange rate [between US dollars and Chinese yuan],” the same trader added. “If the Chinese yuan is strengthened after our cargoes are delivered to the destination, we might be able to take some advantages of the exchange rates gap between now and then to gain certain profits.”

Prices in Europe were stable last week while tightening availability continues to keep prices firm.

Metal Bulletin assessed the grade 441 silicon, in-warehouse Rotterdam price at €2,215-2,325 ($2,573-2,701) per tonne on Friday, unchanged from the previous assessment. The grade 553 price assessment was also steady at €2,150-2,200 per tonne.

Offers were heard above the ranges for both grades.

“Availability is very limited right now. I have consumers looking for material but there is not much available on the spot market for this year,” a European producer said.

“Demand remains strong from all the segments and there is a good momentum for higher grades with inventories running low,” a silicon trader in Europe said.