NEW YORK — U.S. silicon prices have hit new three-year lows due to a combination of slower demand and excess supply.
Spot prices have dropped to $1.22 to $1.27 per pound from $1.25 to $1.30 previously, suppliers and consumers told AMM. It is the first time prices have fallen below $1.25 per pound since February 2010.
"I have enough to get me through February. I’m not actively soliciting for material now. I’ll start looking next month," one consumer said.
"It’s been really dead since the end of the year. No one’s done anything. Some people bought some very cheap metal the last week of December but now everyone has their material, so no one’s looking," a supplier added.
"Things have been extremely slow," another source agreed.
The price decline counters expectations voiced in December that the market would rise in the new year due to curtailments at Brazilian producers in 2012 (amm.com, Dec. 19).
In November, Brazilian producers cut silicon production significantly and began selling power back to the grid for a number of reasons, including weak prices and a dry winter (amm.com, Nov. 15).
FerroAtlantica Group SA will also cut silicon and ferrosilicon production in South Africa by 15,000 tonnes each, citing challenging market conditions and a national energy saving initiative (amm.com, Dec. 13).
Taking this supply out of the U.S. market will undoubtedly raise prices in the future, suppliers said.
For now consumers maintain Brazilian material continues to enter the United States, pushing prices lower.
"I’ve bought some at $1.24 (per pound) recently. ... There is Brazilian material around," a second consumer said.
"I know a couple of (Brazilian) producers have a surplus and are willing to offer me silicon," the first consumer said.
Once this surplus material is depleted prices will increase, the supplier said.
"There was some Brazilian material on the water (in late 2012). (That metal) has a 45- to 60-day lag before it gets to (the consumer, but) there’s no more now," the supplier said, adding that while consumers have material now, their "inventories are quite tight" as well.
"Nobody is sitting on any excess of metal," he said. "At some point, people will have to come back to the market."
The 2013 demand outlook for silicon is still unclear.
"There’s weaker demand (from) the chemical industry than anticipated, and I don’t think there’s (been) such an increase in demand from the secondary aluminum industry for automotive," the first consumer said, adding that the drop in prices has consumers favoring spot business over contract in 2013.
"In the past I’ve done annual contracts, but I’m not willing to do that today. As long as prices are around $1.22 to $1.26 (per pound), I’ll hold out and do spot business," he said.
While the supplier said most customers "booked for the year," some opted to "play the spot market" but "could be hurt if prices go back up."