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Spot silicon buying sags, prices dip

Keywords: Tags  silicon, silicon metal, silicon prices, automotive, FerroAtlántica, secondary aluminum alloys, Michael Cowden

CHICAGO — Spot activity for silicon metal has slowed to a crawl as both buyers and sellers say most market participants are amply covered by long-term contracts.

Some market sources contend that demand and prices for silicon remain firm thanks to solid demand from automakers for silicon-bearing aluminum and robust consumption from the chemical sector for products such as sealants, cosmetics, shampoos and rubbers.

But other sources said the lack of spot activity could reflect what might previously have been overly optimistic automotive build rate and 2013 economic growth forecasts.

"Right now, we’re feeling OK," one producer said. "We’re seeing a market with everyone taking what they said they were going to take, but not a whole lot of spot business."

The producer said he saw little reason for prices to come down, given steady demand and reduced output from South Africa because of Madrid-based FerroAtlántica Group SA’s decision to temporarily shut its silicon production facilities in South Africa (, April 2). But while demand in the United States is strong, it is weak in Europe, the producer noted.

A second producer agreed that the current market has been characterized by a lack of spot activity, as well as relatively stable prices. "It’s been really quiet. People are taking their contracts. But there hasn’t been much spot activity in the last couple of weeks," he said.

One buyer source said suppliers have approached him with offers averaging $1.25 per pound, but some have suggested that they might consider making deals in the low $1.20s. "Producers were bullish. But now the secondary (aluminum) market is weakening," he said.

Producers of secondary aluminum alloys have reportedly cut back production, namely for spot A380.1 material, as shrinking margins and high scrap prices continue to create unfavorable conditions, sources told AMM last month (, March 22).

That apparent dip in demand from the alloy makers, despite continued bullish rhetoric from silicon producers, might be behind what the buyer described as a potential trend toward lower prices.

AMM narrowed its silicon price range to between $1.23 and $1.27 per pound from $1.23 to $1.28 previously based on reported transactions.

A trader source brushed off the "hoo-ha" about strong North American automotive build rates

"You would think that would give a boost to silicon metal prices," he said, adding that instead his company is competing with producers willing to offer deep discounts.

"When you try to offer (silicon) on the spot market, the producers have the same inquiries as well," the trader said. "They are going to be gunning (for inquiries) and dropping the price. ... You can’t compete. It’s all the producers at the moment."

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