Japan's silicon sector sees little change in buying patterns on China tax cut
Tokyo (Platts)--6Feb2013/607 am EST/1107 GMT
Japanese silicon traders and consumers said Wednesday the Chinese
government's removal of a 15% export tax in December has had little impact on
their buying habits, despite initial fears it would lead to major upheaval.
The removal had initially alarmed traders, who feared it would deflate
their sales of non-Chinese silicon by making Chinese supply much cheaper,
and curb efforts to diversify sources of supply from Brazil, Russia, Europe
in 2012 amid political tension between Tokyo and Beijing.
But Chinese export prices have not fallen 15% since the removal of the
tax, market sources said.
Japanese buyers of 553-grade 98.5% silicon metal and other high grades
of up to 99.5% purity said the removal of the tax had not changed their
buying habits -- those reliant on Chinese supply were continuing to buy from
China, while those with diversified sources of supply were continuing to buy
from their regular sources.
Article continues below...
|Metals Daily now available on Platts Market Center|
Platts Metals Daily is now available for subscribers on Platts Market Center, an interactive website featuring Platts news, market commentaries, proprietary price assessments and archived content, as well as the daily PDF.
PMC will also make available several key US benchmark assessments to subscribers earlier in the US day than with the current PDF-only delivery mode. PMC also includes archived proprietary prices and a custom graphing feature. PMC offers a mobile version viewable on PDAs and smart phones.
For further information on registration, please contact Customer Care: firstname.lastname@example.org
Spot Japanese import prices for 553-grade 98.5% silicon metal fell 7.5%
to $1,950-2,000/mt CIF Japan on January 10 from $2,120-2,150/mt on January 3,
immediately after the tax was removed, according to Platts' assessments.
Tight supply helped arrest the fall, sources said.
In fact, the limited fall prompted concerns that China may move to
curtail its export supply. New taxes to replace the 15% export tax may be
introduced, and tougher environmental regulations that may force some Chinese
producers to cut output were also likely, Japanese buyers said.
Although buyers of non-Chinese silicon intend to maintain their
commitment to diversified sourcing, it will not be easy for non-Chinese
suppliers to expand their share of the Japanese market further, sources said.
"Customers who were buying from non-Chinese suppliers have not asked for
volume reductions yet...but it will be difficult for non-Chinese suppliers to
win new contracts as consumer demand falls amid a slow economy," a Japanese
A source close to a non-Chinese supplier said prospective Japanese
buyers were asking for a reduction in prices in response to the Chinese tax
"The possibility of China stopping silicon exports to Japan due to
geopolitical tensions cannot be ruled out entirely, but there is no
customer building its procurement policy based on such a scenario; they
are in wait-and-see mode," another Japanese trader said.
PROCUREMENT POLICIES UNDER REVIEW SINCE RARE EARTH CURBS
Japanese companies started reviewing long-term procurement policies for
all metals sourced predominately from China after it imposed restrictions
on rare earth exports to Japan in 2010. Chinese silicon accounted for 91% of
Japan's silicon imports in 2010.
Chinese customs data shows total exports of silicon metal (maximum
99.99% silicon) fell 18% year on year to 480,121 mt in 2012. Exports to
Japan, China's largest customer accounting for 25% of its exports, fell 31%
over the same period to 119,515 mt.
Part of the decline in Chinese silicon exports can be attributed to weak
demand caused by a slow global economy, shutdowns in the solar industry,
competition from low-priced material smuggled out of China and political
tension between Tokyo and Beijing, said Xu Yingying, silicon metal analyst
with Shanghai Metals Market.
Some Japanese buyers and Chinese sellers in late 2012 began diversifying
their silicon sources and markets, respectively, on fears that strained ties
between the two countries could affect or delay shipments, she added.
As a result, China's monthly silicon exports to Japan have fallen behind
those to South Korea, normally China's second largest customer after Japan,
since October, Xu said. China's silicon exports to South Korea rose 18% year
on year to 29,545 mt over October-December, while those to Japan tumbled 57%
over the same period to 15,880 mt.
However, Japan is likely to remain a major buyer of Chinese silicon metal
in the near-term given the size of its end-user market and geographical
proximity, Xu said.
Japan's three largest secondary aluminum alloy smelters typically buy
over 500 mt/month of silicon metal.
China's total silicon exports are expected to exceed 500,000 mt in 2013,
--Mayumi Watanabe, email@example.com
--Vivian Teo, firstname.lastname@example.org
--Edited by Wendy Wells, email@example.com