LONDON U.S. silicon market participants expect an uptick in prices early next year as more supply is taken out of the domestic market.
Brazilian producers significantly curtailed output in November as they opted to sell power back to the spot market instead of making silicon due to a combination of factors, including weak U.S. prices and a dry winter (amm.com, Nov. 15).
In addition, FerroAtlántica Group SA recently announced it would cut silicon and ferrosilicon production in South Africa by 15,000 tonnes each due to difficult market conditions and a national energy-saving initiative (amm.com, Dec. 13).
The market appears to have already settled into that trend as Brazil sent 2,292 tonnes of silicon to the United States in October, down from 6,724 tonnes in September. Similarly, South African material totaled 594 tonnes in October, down from 2,012 tonnes in September, according to U.S. International Trade Commission data.
Taking supply out of the market will undoubtedly yield higher prices, which are now at two-year lows of $1.25 to $1.30 per pound, sources said.
"I think its about to get really interesting," one supplier told AMM. "We have the Brazilian situation and FerroAtlántica cutting production in South Africa. I think a lot of people have curtailed capacity, and we are burning through inventory very quickly. We are very short on inventory."
Although seasonality led to a few deals at $1.24 per pound this past week, suppliers reported deals at $1.27 per pound. They anticipate prices will surpass the $1.30-per-pound mark by as early as January.
"Theres not a whole lot of activity out there, but Im quoting north of $1.25 (per pound) and I have sold some higher," the first supplier said.
"Silicon is picking up," a second supplier said.
There is "very little product from Brazil" and there will be less material entering the United States from South Africa after FerroAtlánticas cutbacks, both of which will support higher prices next year, he said.
While the first supplier reported some signs of seasonality, the second supplier said demand has been decent.
"Customer orders continue to be strong," he said. "Were seeing new inquiries from semiconductor, chemical and auto-related secondary aluminum customers right now."