---

The Chinese silicon metal market saw frequent fluctuations in 2010, but the price kept running at high level with price increasing most of the time. The tight power supply in dry season, the governmental policy of energy-saving and pollution-reducing, the Customs investigation, investments from other fields, etc, all the factors made the silicon metal market run on an “abnormal” way. The silicon metal market was full of uncertainties in 2010 and the price saw many sharp increases. The silicon metal price increased sharply from March to May as South China suffered from the severe drought. Then after the decrease in the rainy season, the silicon metal price rebounded strongly after late July, when silicon metal price increased greatly unpredictably in rainy season, but dropped in dry season. Looking ahead the silicon metal market in 2011, the market is likely to see more fluctuations and risks. After the Spring Festival holiday, Chinese silicon metal price still kept high-held, but the market was a bit in stalemate as both domestic and overseas buyers were cautious in purchasing, expecting the price to decrease a bit with the arrival of the rainy season. Asian Metal made an interview with several of the silicon metal market participants to review the silicon metal market in 2010 and predict the market in 2011.

---

Appendix one: Silicon 5-5-3 China (RMB/t) From 2010-1-1 to 2010-12-31

---

Appendix two: Silicon 5-5-3 FOB China (USD/t) From 2010-1-1 to 2010-12-31

---

1. Mr. Duan Pengfei - Yunnan Yongchang Silicon Co., Ltd Recent silicon metal market: The silicon metal price in Yunnan was generally stable after the Spring Festival holiday with 4-2-1, 3-3-0-3 and 2-2-0-2 in a range of RMB15,000-15,200/t, RMB15,000/t and RMB16,100/t Kunming respectively. The overall silicon metal market was steady after the holiday with little fluctuation. The operating rate of silicon metal production in Yunnan may see improvement until late April or May, while the operating rate in other provinces may increase in late March or April. The silicon metal market is likely to keep stable in a short term and the future market movement is decided by the supply and demand later.

---

2010 silicon metal market review: The silicon metal market in 2010 was full of uncertainties. After touching the bottom late May, the silicon metal price began to rebound after early June and reached the highest level after the global financial crisis. Except for the increasing demand, the main reason that pushed silicon metal price to go up was the governmental policy. Especially in Q4, when the energy price increased, pushing the production cost of silicon metal at a high level and the market was in stalemate.

---

Prediction on silicon metal market in 2011: It is predicted that the overall silicon metal price will keep running at high level in 2011, but the fluctuations will be smaller than those in 2010. The main reasons are as follows: The production cost of silicon metal in 2011 will be on the rise. Moreover, the existing and newly-built silicon metal capacity may not be released fully in 2011, and the supply in the market will lay relatively weaker influence on the silicon metal market.

---

Company Profile：Yunnan Yongchang Silicon Co., Ltd was built in 2008, belongs to Yunnan Metallurgical Group. The smelter now has three furnaces of 25,000kva with an annual capacity of 50,000t, mainly for 2-2-0-2, 3-3-0-3 and 4-2-1. The smelter is likely to expand the capacity during the Twelfth Five-Year Plan period.

---

2. Mr. Fu Li –Chongqing Trust-Glory New Material Co. Ltd.

---

Recent silicon metal market: After the Spring Festival holiday, Chinese silicon metal market remained firm at high price level. The domestic price for 5-5-3 was around RMB14,000-14,100/t in ports and the export offer also firm at USD2,600/t FOB China. However, overseas buyers were inactive in purchasing in the transition of the dry season and the normal water and rainy season, and it’s expected that the silicon metal export market may see more orders after March. The domestic silicon metal price kept firm after the Spring Festival holiday as the operating rate remained high and the operating rate was still low. The price is likely to be stable in the near future and may see some changes around the second half of March. If more smelters could resume production in the second half of March and the power price decreases later, the silicon metal price may begin to retreat.

---

Market prediction: As for the market in 2011, the capacity and output of silicon metal will keep increasing, and the demand will also see increase, but the amount will be small. The demand from the aluminum alloy industry in 2011 may see few changes compared with that in 2010. The car sales volume of 18,000,000 of China in 2010 was good. The demand from polysilcion field is likely to increase.

---

3. Mr. Zhang Shaote - Heihe Hesheng Silicon Co., Ltd.

---

2010 silicon metal market review: The silicon metal price increased in 2010 mainly due to the recovery of the global economy and the various factors in the domestic market, including of the governmental policy on energy-saving and the emission-reducing, power rationing, the drought and the price rise of the raw materials. The silicon metal price has almost close to the level that before the global financial crisis in 2008.

---

Prediction on silicon metal market in 2011: China will still face the factors of inflation, RMB appreciation and the governmental policy on energy-saving and emission-reducing in 2011, which will result in the uncertainty of silicon metal price trend. With the development of the organosilcion industry in China and the polysilicon industry throughout the world, the demand for silicon metal is likely to increase in 2011, and the floor price may be higher than that in 2010.

---

The company sells its products in both domestic and foreign market except the 200,000t used by the parent company. At the same time, another fraternal company, Xinjiang Hesheng Silicon Co., Ltd. will export most of its products. It is expected that the total export volume will double compared with that in 2010. The customers of the company include famous foreign companies, such as KCC, Dow Coming and Degussa as well as major domestic organic silicon plants.

---

Company Profile：Founded in 2006, Heihe Hesheng Silicon Co., Ltd. is a wholly owned subsidiary of Zhejiang Hesheng Silicon Co., Ltd. The company mainly produces chemical grade silicone metal, including 4-1-1 and 4-2-1. The company has twelve furnaces 12,600kva with a capacity of 100,000tpy of silicon metal. To ascend into the front rank of the silicon metal and organic silicon industry in the world, the company takes advantage of Xinjiang development policies and established Xinjiang Hesheng Silicon Co., Ltd. in 2009. The company will make full use of the resource advantage in Xinjiang to build circular economy projects of 250,000t silicon metal and 400,000t of organic silicon.