Buyers' market emerging for US silicon as auto demand stays weak

New York (Platts)--17Aug2005

US silicon metal prices were steady in the last week at 73-75cts/lb, with
little business reported while consumers in the aluminum sector expect to book
material or see quotes near 70cts/lb at next month's Institute of Recycling
Industries Commodities Roundtable gathering in Chicago, where negotiations for
fourth-quarter and 2006 contract business for silicon begins, at least for
many consumers. "I see 70, 71 cents in the offing," said a buyer for a large
aluminum producer, adding that lows could be booked at 67-68cts/lb if
large-volume consumers are able to leverage a supplier or two to this level.
     Soft pricing is not a surprise given plentiful supply in the US,
including material produced in the US, Norway, Brazil and South Africa,
combined with weak demand for silicon-bearing aluminum alloys from the auto
sector, market sources agreed. Producer sources were unavailable for comment.
     For higher-grade silicon used in the aluminum sector, including 0.25%
iron material, prices are expected to be a few cents higher than the
commodity-grade silicon. One supplier acknowledged that prices were soft,
saying, "I believe prices will be in the low-70cts range by the time of the
ISRI meeting." He also sees "a trend away from firm pricing on annual
contracts to shorter-term deals," apparently the result of some consumers
being stuck with inventory in the last year after (unknowingly) overbooking on
annual contracts during last year's fall booking season.
     One consumer in the aluminum sector said he would book any silicon at
ISRI for this reason: The silicon he booked for 2005 will stretch into 2006 as
demand from his customers remains slow. "I won't even be doing frame deals" at
ISRI, he said, referring to deals where material is booked with the agreement
that the price will be set at a later date. He also said he had not heard of
any material being sold or offered under 73cts/lb.

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