In 2022, the price of silicon will be greatly disturbed by the epidemic situation, the structure of supply and demand, and the supply side (power factor).

At the beginning of the year, due to the impact of the Spring Festival holiday, silicon prices declined slightly. After the Spring Festival, the downstream areas resumed work one after another, and the demand for centralized replenishment of silicon was released. In addition, the supply pressure in the southwest dry season was not large, and the cost of raw materials also rose sharply due to the problem of geographical conflict abroad, the price center of silicon gradually rose.

In March June, the domestic epidemic situation spread in many places, especially in East China, which impacted downstream demand. The transportation of raw materials and products was limited. In addition, the launch of new capacity and the increase in the operating rate of silicon plants near the wet season, the price of silicon fell all the way to the lowest point in the year.

Silicon prices rose and fell several times from June to September. In June, Shanghai resumed production, and downstream consumption recovered stronger, driving the price of silicon up. But then the wet season came, and the output expanded, and the price fell again. In August, Sichuan and Yunnan successively imposed power rationing. Due to the epidemic situation in Xinjiang, the supply contracted in the short term, supporting the rise of silicon price, approaching the peak of the year. At the end of August, the high temperature ended and the factory resumed production. The downstream demand did not improve substantially, and the support under the high silicon price was insufficient.

From September to October, due to the epidemic situation in Xinjiang and the continuous power rationing in Yunnan, as well as the impact of futures listing, the silicon price rose slowly, but the downstream procurement was dominated by rigid demand, and the upstream and downstream were locked in a game. At the end of the year, with the relaxation of epidemic control, the production in Xinjiang offset the production reduction in the dry season in Southwest China, and the silicon supply side was relaxed. However, the downstream organic silicon and aluminum alloy markets were always flat, and the silicon price showed a slow downward trend.

According to the monitoring of the SunSirs the average price of silicon in 2022 will be 20411.99 RMB/ton. This year, silicon has repeatedly broken new historical peaks, with the highest price of 23910 RMB/ton and the lowest price of 17090 RMB/ton.

Cost support still exists

This year, the overall price of crude oil has moved up, and the price of petroleum coke has risen significantly due to the rising cost, which has driven the price of downstream graphite electrode products to rise. However, in 2023, the global economy will still be in a weak shock range. With the weakening demand, the price of crude oil is expected to move downward, and the price of petroleum coke may also move downward with crude oil. The price of clean coal in Xinjiang is also at a historical high. The electricity price in Yunnan and Sichuan has risen since November, with the price in Sichuan rising by 0.1 RMB and that in Yunnan by 0.15 RMB. The average price of silica is 495 RMB, 34 RMB/ton higher than the same period last year. As of December 23, the production cost of silicon was 17917 RMB, with a profit margin of 6.92%, which was at a historical high level.

Increased inventory pressure

As of December 23, the total inventory of silicon in the three places was 121000 tons, and the overall social inventory increased by 4000 tons compared with the end of last month, a year-on-year increase of 44.0%. In the first half of this year, the epidemic situation spread in many places, and the stock removal was poor. In the second half of this year, the logistics in the northwest region stagnated, and the stock accumulation continued. The consumer end of the year performed poorly, leading to the silicon stock at a historical high.

Expectation of supply and demand performance of silicon in 2023

It is understood that in 2022, the new capacity of silicon will be 465000 tons, and the output will be increased by 585300 tons. From the perspective of the new production plan in 2023, it is estimated that the new production capacity will be 1.845 million tons next year, concentrated in Yunnan, Xinjiang, Qinghai, Gansu and other places. The production capacity will be put into production in June December. The first quarter of production is mainly due to the failure to deliver the capacity in 2022.

In 2023, the disturbance of the epidemic situation on the supply side will be reduced, and Xinjiang will maintain the leading position in the supply of silicon. The southwest region will still show seasonal fluctuations, so it is necessary to pay attention to the actual power supply level of the southwest region in 2023. In addition, Yunnan will continue to restrict production or continue to exist. For the high energy consuming industry of silicon, the Yunnan provincial government will most likely continue to implement measures to limit production from September to October.

In the expectation of organic silicon repair in the real estate industry, the annual output of DMC is expected to continue to grow. In the first half of this year, the overseas demand for organic silicon increased, while in the second half of this year, the export was weak, the terminal real estate industry was sluggish, the domestic demand was weak, and the falling price led to the upside down of profits. Polycrystalline silicon has been put into production with great efforts. At present, the polycrystalline silicon enterprises still have large profits. The enterprises maintain a high enthusiasm for production, and the operating rate remains at 70% - 80%. It is estimated that 1.17 million tons of polysilicon will be invested in 2023.

Review and prospect

This year, the output of silicon is maintained at a high level, but the downstream performance is average. The silicon market is in a pattern of oversupply, and the price is under pressure. Looking forward to 2023, the high output of silicon is mainly concentrated in the second half of the year, and the high inventory may be difficult to change. However, as the production capacity of polycrystalline silicon and organic silicon will climb, the price of silicon is expected to be strong first and then weak.

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