The Zhitong Finance App learned that according to Antec, the industrial silicon market this week showed a pattern of “futures fluctuated at a high level and spot prices continued to rise”. Due to continued contraction in market supply, compounded by expectations that large enterprises in the Xinjiang region will cut production at the end of the month this week, the willingness of various companies to raise prices has generally increased, and spot prices have been rising for the second week in a row. The main futures contract completed the monthly exchange, and the 2611 contract fluctuated within the range of 8650-8880 yuan/ton. The market's focus was on whether downstream procurement intentions could continue to improve after production cuts and implementation in Xinjiang.
Market performance: futures fluctuated at a high level, and spot prices continued to rise
In terms of futures, as of the close of August 20, the main 2611 contract closed at 8,755 yuan/ton, up 180 yuan/ton from 8,575 yuan/ton last week (August 13), or about 2.10%. The market during the week was boosted by expectations of production cuts from major manufacturers in Xinjiang. At one point, it hit a high of 8880 yuan/ton, but was suppressed by monthly contract swaps and hedging orders, then there was a decline and consolidation. In terms of holdings, 2609 contract positions continued to decline, 2611 contract positions continued to increase, capital gradually moved to long-month contracts, and the focus of market trading changed.
On the spot side, according to Antec's August 20 quotation statistics, the comprehensive price of industrial silicon nationwide was reported at 8,916 yuan/ton, up 122 yuan/ton from last week. In terms of specifications, 553 #报8704元 /ton, 441 #报8931元 /ton, and 421 #报9360元 /ton are up 150 yuan/ton, 92 yuan/ton, and 64 yuan/ton, respectively, from last week. Looking at the subregions, the comprehensive prices in Xinjiang, Yunnan, and Sichuan were 8,762 yuan/ton, 9,673 yuan/ton, and 9,700 yuan/ton respectively, up 138 yuan/ton, 80 yuan/ton, and 50 yuan/ton respectively from last week. Of these, 553 #涨幅持续领先，反映出供给收缩主要集中于低品位规格产品，其价格弹性更为突出。 In terms of export FOB, 553 #较上周小幅上涨25美元 /ton, 441 #、3303 #与上周持平。
Judging from the transaction situation, spot prices continue to rise, but downstream users have limited acceptance of higher prices and are less willing to go up. Actual transactions are still dominated by small orders that are just needed, and there has been no large-scale inventory replenishment. Futures traders raised their quotations as futures prices rose. Low-cost supplies were scarce in the market. Some downstream users switched to futures futures procurement with price advantages, and the supply chain in trade circulation was tightened.
Supply side: Expectations of production cuts are heating up, and expectations of supply contraction are strengthening
Supply-side contraction is expected to heat up further this week. Large enterprises in the Xinjiang region have increased cost pressure due to the cancellation of preferential electricity prices for outsourced electricity purchases. They plan to shut down 32 furnaces, which is expected to affect monthly production of about 50,000 to 60,000 tons, accounting for about 15% of the country's monthly output. The impact of production cuts is expected to be mainly reflected in September. In the southwest region, 3 new units were discontinued in Sichuan, and the number of furnaces produced dropped to 26; Yunnan maintained stable production of 38 units, and the pace of enterprises resuming production has slowed down. In other production areas in northwest China, Gansu is being suppressed by high electricity prices, and the start of local silicon plants continues to maintain a historically low level; companies in Inner Mongolia, Ningxia and other places continue to cut production. Overall, some companies have cut production since August. Combined with plans to cut production by major factories in Xinjiang, it became the focus of the market this week, and supply-side contraction is shifting from “expectations” to “reality.” If major manufacturers cut production as scheduled, the supply gap will expand further in September, and the pace of inventory removal is expected to accelerate markedly, forming strong support for market prices.
Demand side: stable consumption of polysilicon, slight decrease in silicone start-up, stable aluminum alloy
Demand-side performance is divided, and overall operation is maintained smoothly. In terms of polysilicon, prices in the polysilicon market rose markedly this week, but actual transactions were dominated by sporadic long orders. The operating rate of the enterprise is basically the same, and there are no significant adjustments to the production schedule. The consumption of industrial silicon remains stable. However, it is expected that polysilicon production will increase further in August, and the consumption of industrial silicon will increase. In terms of silicone, due to production cuts by some monomer companies in late August, the weekly operating rate declined slightly. The operating rate of the industry remained around 60%, and demand for industrial silicon was weak. On the aluminum alloy side, the operating rate of enterprises is basically stable. It is expected that as the high temperature season gradually ends, the downstream operating rate will pick up. Combined with the support that just needed orders, the operating rate of the aluminum alloy industry is expected to rise slightly in the future. Overall, market demand remained relatively stable in September, and a slight increase in consumption in the polysilicon sector provided some support for industrial silicon prices.
Looking ahead to the future market: the implementation of production cuts is the key, and price support is strong
Overall, the industrial silicon market has now entered the stage of “supply contraction continues to ferment, and demand is stable and effectively supported”. Supply side: Xinjiang's production reduction plan at the end of the month became the focus of the market, and supply is likely to tighten in September; demand side: the polysilicon sector is strong, the silicone sector is weak, and the aluminum alloy sector is stable. Overall, there are no major variables. Demand in September is relatively optimistic. Currently, spot prices have been rising for two consecutive weeks. The willingness of enterprises to raise prices has increased, and supplies at low prices in the market are scarce. Prices are expected to remain volatile in the short term. The subsequent market focus is on whether supply contraction, polysilicon price trends, and downstream procurement intentions of large enterprises in Xinjiang can continue to improve after production cuts are implemented.
