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Silicon prices rise on steady demand

Keywords: Tags  silicon, silicon metal, silicon prices, Brazil drought, U.S. winter, logistics, imports, trade petition Canada


CHICAGO — Silicon metal prices have continued to rise on steady demand as well as import and logistical constraints, market sources said.

AMM’s silicon metal prices are in a range of $1.35 to $1.39 per pound, up from $1.30 to $1.35 previously.

Rising prices come as some Brazilian suppliers are struggling to keep up with contracted volumes because of a drought that has reduced hydroelectricity availability, pushing some suppliers to sell power back to the grid, some market sources said.

"I couldn’t quote (an aluminum producer) because I just don’t have the material to," one trader said, adding that he has instead sold smaller lots to customers at higher prices. "There’s just no reason to lower prices with less offshore material available."

Reduced supplies out of Brazil also come as traditional suppliers to the U.S. market are instead sending material to Canada following a successful trade petition filed by Miami-based Globe Specialty Metals Inc. against Canadian imports from China (amm.com, Nov. 19), market sources said.

While the trade petition’s impact has already been factored into prices, a harsh winter in the United States and Canada has perhaps not been, one producer source said, noting that snow and ice have snarled barges, trains and trucks and made it difficult to get material to its destination on time.

Ice has made it difficult to move barges from St. Louis to Chicago on the Illinois River, and material has been diverted as far away as Pittsburgh on the Ohio River, market sources said. While some sources said conditions should improve as the weather warms, others said that melting snow and ice will cause rivers to flood—meaning the transportation situation could get worse in the short term.

Also boosting tags are customers who used the spot market to drive down formula-based contract prices last year—a strategy that has backfired in 2014, some market sources said. "Customer offtake in the spot market has been excellent," the producer source said. "And every deal they do is higher than the last, so that strategy is going against them."

Market sources also reported steady to strong demand in sectors as diverse as the chemical, solar, aluminum and automotive markets and expressed optimism that those markets would remain healthy for the balance of 2014.

But not all consumers agreed with that assessment. One consumer source said his company has not been in the spot market because it has contracted enough metal to meet its requirements to date. The consumer also questioned to what extent logistics were really creating supply shortages, arguing that suppliers might be exaggerating in an attempt to talk up the spot market.

"Demand is continuing as expected. We’re not scrambling for metal and everything is coming in pretty much on schedule, so we’re in good shape," he said.


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