In December, the price of metallic silicon rose and was in an overall upward cycle. According to the commodity market analysis system of Shengyishe, as of November 29, 2023, the reference price for the domestic 441 # metallic silicon market was 15620 yuan/ton, an increase of 2.90% from the beginning of the month and a decrease of 18.39% from the same period last year. In December, the fundamentals of silicon metal were in a state of weak supply and demand, with the supply side continuing to contract. This was mainly due to the low inventory of silicon factories in Xinjiang due to environmental restrictions in the north; The Southwest region has officially entered the dry season, and the operating rate remains low. Supply disruptions drive up prices.

Supply side

In December, China’s silicon metal production was about 363510 tons, a month on month decrease of 59510 tons, a decrease of 14.07%, and a year-on-year increase of 59030 tons, an increase of 19.39%. Among them, Xinjiang produced 182300 tons, accounting for 50.15% of the total production; Yunnan’s production is 479780 tons, accounting for 13.69% of the total production; Sichuan produces 23900 tons, accounting for 6.57% of the total production. In 2023, the cumulative production was 3914020 tons, with a year-on-year increase of 411450 tons, an increase of 11.75%.

The supply of metallic silicon has actually contracted, the cost of electricity in Southwest China is too high, the production enthusiasm of silicon plants is low, and the shutdown and reduction of production have increased. The weekly production has basically been at the bottom of the same period in history; Affected by cold wave weather and environmental policies, production in the north has decreased. High energy consuming enterprises in Bayannur, Inner Mongolia have been notified to take turns insulation during the morning and evening peaks. Currently, three silicon enterprises have been affected, with a daily insulation time of 2-4 hours, and there is no clear end time for power restrictions; Some silicon factories in Xinjiang have been notified to maintain a 2-hour daily insulation, while other silicon factories in Ili are temporarily operating normally.

Demand side

In December, domestic polycrystalline silicon continued its downward trend from the previous month, with a slight slowdown in the decline. As of the end of the month, the mainstream range for single crystal dense materials with a model of first-class solar energy is maintained at 55-6000 yuan/ton. Silicon material manufacturers are maintaining a reasonable level of operation, and maintenance equipment has been gradually started before. The addition of new production facilities gradually reaches mass production, bringing about stable supply increment. The increase in supply leads to the accumulation of inventory in enterprises, weakening the bargaining power of silicon material manufacturers, lowering prices to clear inventory, and coupled with the decrease in winter installation demand, polycrystalline silicon enterprises still have the possibility of continuing to lower prices.

In December, the overall domestic organic silicon DMC market showed a weak downward trend, with the market center constantly moving towards a low level. At the end of the month, the market price was around 13500-14200 yuan/ton. Some organic silicon DMC factories have reduced their operating costs and actively adjusted their operating rates to adapt to the current weak market. However, due to demand constraints, the overall supply pressure on organic silicon DMC factories still exists. With the continuous exploration of market prices, downstream demand has improved to a certain extent, bringing a slight upward trend to the market. It is expected that the short-term market will mainly operate steadily

In December, the price of aluminum alloy fluctuated and increased, with a slight increase in the price of aluminum alloy ADC12. The current quotation is 20100 yuan/ton, and aluminum alloy factories will have a moderate amount of inventory by the end of the year. It is also difficult to place large quantities of orders during the process of silicon price increase, and there is a lot of wait-and-see sentiment.

According to customs data, industrial silicon exports in November reached 47600 tons, an increase of 9.17% compared to the previous month and a decrease of 3.25% compared to the same period last year. Exports slightly increased compared to October, but the export price of metallic silicon increased due to the improvement in foreign market demand and the rise in the RMB exchange rate.

Future Market Forecast

The decrease in operating rates of silicon factories in the north and south has effectively alleviated the overall supply pressure on the metal silicon market. In December, the market sentiment was slightly optimistic, with prices rising slightly. In terms of demand, the price of polycrystalline silicon is prone to decline but difficult to rise, but with the release of new production capacity, production remains high, and there is still a good demand for metallic silicon; With the weak market situation, the operating rate of organic silicon has slightly declined, and there is a possibility of further decline in the operating rate of organic silicon factories in the future; The price of aluminum alloy has increased, but the purchase of metallic silicon remains in high demand. Overall, in the short term, the supply of metallic silicon in the market will be less than demand, and market sentiment has been boosted. It is expected that silicon prices will continue to fluctuate strongly in January.