Where will the silicon metal market head?

BEIJING (Asian Metal) 9 Sep 05 – After part of the outcome of the tender was released yesterday, market participants are worrying about the future market; which direction will it be heading to?

“The tender includes about 10,000t of silicon metal 5-5-3 and 7,000-8,000t of 4-4-1, and the rest are silicon metal 3-3-0-3 and 2-2-0-2,” a trader in South China told Asian Metal, “For traders who won the bid with a large quantity, the price may be as low as USD910-920/t CFR for 5-5-3 and USD970/t CFR for 4-4-1. And from this outcome, we can see that traders have to purchase 5-5-3 for RMB7,100/t (USD875/t) to make ends meet.”

The source added, “Most smelters which produce 5-5-3 are in Guizhou, and they don’t want to sell below RMB7,400-7,500/t (USD912-925/t) due to their high power cost.” From this analysis we can see, in one way that producers don’t want to lower prices, but in the other way, traders have accepted orders with low prices and have to purchase metal in the coming month at a low price, then where will the market be heading to, the source said.

According to the source, he accepted part of the tender with a quantity of 200-300t for USD940/t CFR for 5-5-3. “There is not much room for us to make a profit, as we bought materials for about RMB7,300/t (USD900/t) in late August.”

A small smelter in South China is also confused about the result of the tender, saying, “We can’t sell silicon metal 5-5-3 for RMB7,300-7,400/t (USD900-912/t) because this price is too low for us. Our price for 5-5-3 is RMB7,500/t (USD925/t) now, and we will make a delivery of 120t at this price on Saturday.Asian Metal Copyright Our price for 5-5-3 is RMB7,500t USD925t now, and we will make a delivery of 120t at this price on Saturday.Asian Metal Copyright”

“We believe the market will go up a little bit this September,” the source added, “So I don’t think most smelters are willing to sell at this low price unless they are trapped by lack of capital and have to sell at lower prices.’

The source runs one furnace of 5,000kva,and mainly produces 5-5-3 and 4-4-1, with a monthly output of 200-300t, powered by hydro-electricity of RMB0.28/kwh.