Silicon Metal Market Faces Pressure with Price Reductions in China and Germany Due to Demand Slowdown
- 02-Dec-2024 8:30 PM
- Journalist: Francis Stokes
In late November, the Silicon Metal market witnessed a 0.5% price decline in both China and Germany. In China, the price reduction stems from multiple challenges which includes a significant downturn in photovoltaic (PV) module production, diminishing domestic and international demand, and increasing Silicon Metal inventories. The decrease in prices within the German market indicates a diminishing demand, which is exerting a downward trend on the cost of Silicon Metal.
The Silicon Metal market in China is experiencing a slowdown with a dip in both local and global demand. As the end of the year nears, a decline in the production of photovoltaic (PV) modules is expected. Concurrently, the prices for PV glass have fallen due to weak market demand. The ongoing dry season has resulted in higher electricity prices, subsequently leading to an accumulation of Silicon Metal inventories due to a reduction in production by downstream industries. In a notable turn of events, a key production facility in Xinjiang has altered its operational strategy. Contrary to the initial plan of reducing production in phases starting late November, the reduction was postponed, with a gradual halt in furnace activity commencing in December. The duration of this production cutback is yet to be determined, casting a shadow of uncertainty over the Silicon Metal market.
In Germany, persistent trade barriers have further weakened demand, intensifying downward price pressure on Silicon Metal. Increasing Silicon Metal stockpiles have created an imbalanced supply-demand landscape. The price decline is attributed to average demand, year-end inventory reductions, and urgent sales prompted by potential vendor insolvencies. Concurrently, shipping costs from China to Europe experienced a 2% decrease in this period, contributing to the overall decline in Silicon Metal prices.
Manufacturers are strategically responding to subdued global demand by creating a controlled scarcity of Silicon Metal. This approach aims to elevate prices and restore module production profitability. China's production capabilities are being strategically scaled down, with plans to temporarily cease operations in certain factory sections during winter and reduce exports.
Recent trends in the market indicate ongoing obstacles in revive consumer enthusiasm, especially within the automotive and electronics industries of Germany, which are witnessing a downturn in demand. These conditions, along with wider economic struggles, are expected to maintain continuous strain on Silicon Metal prices. However, ChemAnalyst maintains a positive outlook for the future of the Silicon Metal market. This positive stance is primarily based on the anticipated increase in demand from the downstream sectors as the year draws to a close.