New York (Platts)--19Jul2007

US silicon metal prices have surged over the last week on strong spot
market sales against a backdrop of strong chemicals demand and talk of a
recovery in metallurgical demand for the fourth quarter.
     A consumer reported buying two truckloads at $1.07/lb, delivered Midwest,
and said that it had been a "struggle" to secure the material at all. "I
bought three truckloads in the end for delivery over the next month; one of
them is for prompt delivery. But I really had to struggle to get them at
all," the consumer said. The consumer also bought a truckload of low iron
material at $1.105 cents/lb. Meanwhile, suppliers reported selling multiple,
spot truckloads at prices from $1/lb, up to $1.07 delivered.
     One supplier said that having achieved $1.05 on a FOB basis, it was now
considering offering subsequent spot material at $1.06-1.07/lb.
     Suppliers said that they were being led to believe that the market could
see an upturn in metallurgical demand in the fourth quarter of this year.
     Silicon prices have been driven up largely on the strength of demand in
the chemicals and semi-conductor sectors this year, according to suppliers and
consumers. On the metallurgical side, some consumers opted to take delivery of
the minimum quantities for their first-half contracts. According to suppliers,
some consumers chose to roll some deliveries over into the second-half. One
supplier said: "When we were asked to [roll back deliveries] we worked with
them." However, the same supplier said that it had alerted its customers with
outstanding loads to be delivered to arrange for delivery before June 30, or
risk losing them.
     Another supplier also said that it had restructured contracts with some
of its customers, which would result in material booked for H1 2007 being
shipped in H2 2007 and possibly even into Q1 2008.
     Meanwhile, suppliers speculated that if metallurgical demand for silicon
was running at the same pace as last year, silicon prices would be in a range
of $1.25-1.50.
--Anthony Poole, anthony_poole@platts.com