China's Domestic Silicon Price Gets Support from Rising Demand Amid Tight Market

Overseas traders have started placing orders for Chinese silicon metal for June amid a tight market, giving a boost to domestic prices of 553 grade, China Nonferrous Metals Industry Association said in a report on its website Monday.

The tightness was due to producers' difficulty in sourcing raw materials for processing, CNIA said.

Chinese domestic prices of 553 silicon stood at Yuan 10,300-10,400/mt ($1,545-1,560/mt) last week, stable from the second week of May, while FOB China prices and CIF Japan prices for 553 were at $1,460-1,490/mt and $1,460-1,480/mt, respectively, last week, both flat over the same period, CNIA data showed.

Some overseas traders began placing orders for June from mid-May, supporting trade volumes for this month, CNIA said.

Meanwhile, in spite of the current rainy season in southwest China's Sichuan province -- a key silicon production zone in the country -- supply of electrodes and petroleum coke -- raw materials for silicon processing -- has been tight, making it difficult for producers to procure them. Silicon production in China is heavily dependent on hydro power.

At another key domestic silicon production base, Dehong Autonomous Prefecture, in central China's Yunnan province, just two silicon furnaces out of 70 are currently operational, CNIA said, blaming this on environment protection monitoring.

Dehong has 33 silicon producers with 70 furnaces, which have an aggregate output capacity of 460,000 mt/year, Dehong government data showed.

CNIA forecasts domestic prices of 553 silicon to jump to Yuan 10,400-10,600/mt this week, as there is a rush to cover requirements and deliveries this week, before the Dragon Boat Festival holiday in the last week of May.

Yunnan, the country's biggest silicon production base, has silicon output capacity of 1.2 million mt/year, CNIA data showed. Xinjiang and Sichuan, the second and the third largest silicon production bases in China, has silicon capacity of 1.05 million mt/year and 700,000 mt/year, respectively, according to CNIA.