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
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
"Right now, were feeling
OK," one producer said. "Were 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 SAs decision to temporarily
shut its silicon production facilities in South Africa (
amm.com, 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. "Its been
really quiet. People are taking their contracts. But there
hasnt 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 (
amm.com, 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
"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 cant compete.
Its all the producers at the moment."