Spot prices of 553-grade silicon metal of 98.5% purity rose this week on supply tightness in China even as demand in the country as well as the rest of Asia remains strong.
The export price was assessed by Platts at $1,870-1,950/mt FOB China on Thursday, up from $1,860-1,920/mt FOB a week ago, while the import price in Japan was assessed higher at $1,900-1,960/mt CIF Japan Thursday compared with $1,890-1,930/mt CIF a week ago.
This week a producer with plants in Hunan, Guizhou and Sichuan sold around 70 mt at $1,950/mt FOB China to a buyer in Southeast Asia for loading over September-October from Huangpu port.
A Japanese trader said he bought 200 mt at $1,945/mt CIF Japan for loading in October from Guangzhou, while another sold 60 mt at $1,960/mt CIF Japan, also for October loading from Guangzhou.
A Japanese secondary aluminum alloy smelter source reported an offer at Yen 205/kg ($2,050/mt) ex-warehouse for late-October delivery.
Offers from China were heard at $1,880-1,970/mt FOB this week. Chinese suppliers have to sell at least $1,900/mt FOB in order to breakeven given current domestic prices, a Shanghai-based analyst said.
Supply of prompt cargoes is tight also because producers are holding back in anticipation of higher prices even as some buyers are seeking to place their orders before China shuts for the Mid-Autumn Festival next week and the National Day holidays in early October, sellers said.
SOME BUYERS HOLD BACK HOPING PRICES WILL EASE
While some Japanese end-users who found their stocks running low made purchases this week for October-November, others held back as they considered the price too high.
"Some [end-users] did not buy in summer as Chinese export prices were above target. We bought in July and August and the supply will keep us going till October-November," said one end-user, who did not buy any material this week. His last purchase was for around Yen 190/kg ($1,960/mt) delivered, which would be around $1,860/mt CIF basis excluding handling and local freight charges.
"I plan to hold back purchase until next month. I am hoping that the exchange rate will be in my favor," he said.
Another end-user, who supplies secondary aluminum alloy products to a major automaker, said he was not buying this week as his company had enough stocks to tide him over. "Stocks will not last forever and we will have to buy some time ... if silicon costs Yen 220/kg, 230/kg, we have no choice," he added.
The company might substitute silicon with aluminum wheel scrap and engine shred, he said. "Scrap supplies are tight so it does not mean using scrap will be cheaper. Silicon usage volume could be reduced significantly but the overall [aluminum alloy] production cost may rise if scrap becomes expensive," he added.
Market sources were not sure of the trend the prices would follow. Some Japanese market participants said Chinese export prices rose on higher demand triggered by the awarding of October-December buy tenders in the last three weeks.
"Prices are likely to hold until the next tender season in late November-December," a Japanese trader said. Another Japanese end-user said, however, that he expected prices to fall in the next few weeks as buying typically slows down after the tenders are awarded.
The Shanghai-based analyst said that prices were likely to stay high or even rise further. "We see demand providing support for prices in September. Prices may rise too, though only slightly, in October as well," she added.
Chinese domestic 553-grade silicon prices at Huangpu port rose to Yuan 11,500-11,600/mt ($1,867-1,883/mt) Thursday, up from Yuan 11,300-11,500/mt a week ago.
