Since the beginning of 2024, although the operating rate on the supply side has maintained a certain stability, the downstream consumer market has gradually shown signs of weakness, and the mismatch between supply and demand has become increasingly prominent, resulting in an overall sluggish price performance this year. The market fundamentals have not seen significant improvement, and the central trend line of prices is gradually moving downward. Although some traders tried to take advantage of the market’s good news to go long, due to the lack of solid support from fundamentals, the strong price trend did not last long and soon fell back. According to the evolution of price trends, we can roughly divide the changes in silicon prices in the first half of this year into three stages:
1) January to mid-May: During this period, the price-supporting behavior of manufacturers caused the spot premium to continue to rise. Due to the long-term shutdown in Yunnan, Sichuan and other regions, and the fact that it will take some time before the resumption of work during the flood season, the factories have no pressure to ship. Although the inquiry enthusiasm for the spot price of 421# in the southwest is not high, the price fluctuation is relatively limited. Local manufacturers are more inclined to wait for further price increases, while the downstream market generally takes a wait-and-see attitude. In the northern production areas, especially in Xinjiang, production capacity was forced to be reduced or stopped for some reason, while Inner Mongolia was not affected. Judging from the situation in Xinjiang, after the silicon price was continuously lowered, the market inquiry enthusiasm decreased, and the previous orders were basically delivered. With limited subsequent order increments, the pressure to ship began to appear.
2) Mid-May to early June: During this period, market news and capital movements jointly promoted a short-term rebound in prices. After a long period of low operation and falling below the key price of 12,000 yuan/ton, market funds diverged, and some funds began to seek short-term rebound opportunities. The merger and reorganization of the photovoltaic industry and the smooth exit mechanism of the market, as well as the world-class photovoltaic projects planned to be built by Saudi Arabia, have provided Chinese manufacturers with a large market share, which is beneficial to the price of industrial silicon from the demand side. However, under the background of continued weakness in fundamentals, it seems powerless to drive up prices with low valuations alone. As the exchange expands the delivery storage capacity, the momentum for the rise has weakened.
3) From the beginning of June to now: the market trading logic has returned to the fundamentals. From the supply side, there is still an expectation of growth. The northern production area remains at a high level, and as the southwestern production area enters the flood season, the willingness to resume production gradually increases, and the increase in the operating rate has a high degree of certainty. However, on the demand side, the photovoltaic industry chain is facing losses across the board, inventory continues to accumulate, pressure is huge, and there is no obvious sign of improvement, resulting in a continuous decline in the price center.
Post time: Aug-19-2024
