CHICAGO Silicon metal
prices have dipped in recent weeks, with market players split
on whether the decline is a result of overreaction to fewer
lower-priced deals or a lack of overall demand.
AMM has lowered silicon
metal to $1.20 to $1.23 per poundin line with most
reported transactionsfrom $1.23 to $1.27 previously.
But limited volumes have been
sold both significantly above and below the new range. One
trader reported selling a truckload of silicon metal at $1.26
per pound, while another reported selling one truckload to a
secondary aluminum producer at $1.15 per pound delivered and a
second truckload to another secondary aluminum company at
$1.138 per pound delivered.
Some market sources contended
that sales below $1.20 per pound were outliers; others said
they likely were made by traders who werent concerned
with replacement costs. But the trader involved in making deals
at $1.15 per pound and below insisted that his prices were
representative of the market, calling deals at $1.20 per pound
or more "producer propaganda."
"Its all hogwash," he
said. "The market is nowhere near those levels. If that were
the case, I would be selling at those levels, and I
havent booked anywhere near them." He said that key end
markets, such as the chemical sector, were "in the toilet."
But one producer source called
deals below $1.20 per pound "aberrations." He said his company,
concerned that the market may have dropped significantly,
dropped its prices to $1.22 per pound and in short order sold
four to five truckloads. "It showed us that ($1.22) was the low
end of the market because (buyers) jumped on it. We brought the
price down because we sold at levels we shouldnt
The producer source said that
prices far below $1.22 per pound were outliers because most of
the market had not been able to replicate them. "It was one guy
with a couple of loads," he speculated.
Another trader said he had
booked two truckloads recently at $1.23 per pound, adding that
demand was "steady" thanks to a strong automotive market and a
potentially recovering construction market. He said he
didnt doubt that deals had been transacted at $1.15 per
pound or below, but noted that if he had done business at such
low prices it would not be enough to match replacement costs
for new material.
A second producer source said
the market was "steadily plodding along." He said his company
recently sold a truckload of spot silicon metal at $1.23 per
pound and less-than-truckload volumes in a range as high as
$1.25 to $1.28 per pound. He said that while $1.20 per pound
might be available, his company would not quote that low.
"People (contract buyers) are taking what they said they would
and not much more. Its about what buyers thought it would
be, so theres not a whole lot of spot business."
Sources across the price
spectrum seemed to agree.
"The whole business is small
quantities," one trader said. "The majority of large customers
have already purchased (their requirements)."
Several such customers contacted
by AMM said they would not be in the market again
With most silicon metal booked
under contract, the silicon metal spot market has deteriorated
substantially, the first trader said. "Because of that,
companies that have allowed for some spot (buying) ... go into
the market and are able to benefit from lower pricing," he
said, contending that a lack of spot activity would make it
harder to sustain prices going forward.