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Why Supply Chain Risks Should Not Be Overlooked
In the past two years, silicon metal prices once surged, with 441 spot prices reaching RMB 30,000/ton at the peak. Die casting and secondary aluminum plants scrambled for materials, contracts failed. Now, with China's silicon metal overcapacity, prices have halved and spot supply is plentiful. The market seems calm, but the real question is: does your supply chain still need a “second supplier”?
Although supply is abundant, the following four potential risks should still be noted by aluminum buyers:
- Regional logistics and port controls: In early 2024, rail slot delays occurred in some inland supply areas, and southern port yards experienced congestion. Even if goods are available, they may not be shipped out on time.
- Imbalanced quotation structure: Many low-priced offers come from unstable small plants, lacking complete COA (Certificate of Analysis) and quality traceability, raising the risk of substandard deliveries.
- Supplier credibility issues: Some extremely low-priced sources historically provide no bills of lading or guarantees on payment and delivery schedules, leaving buyers at a loss with no recourse.
- Overseas restocking demand recovery: Markets in India, Vietnam, and Indonesia are seeing restocking demand, which may quickly absorb low- to mid-priced supply.
Building a Second Supplier Is About Negotiation Power, Not Just Emergencies
For aluminum die casting plants purchasing over 300 tons annually, maintaining a second supplier does not mean splitting orders but holding leverage in price and delivery negotiations.
We observe most contract customers adopt the following setup:
- 80% with a fixed main supplier (e.g., Minmetals): monthly or quarterly contracts
- 20% reserved for spot purchases: backup in case of abnormal price or delivery
- Document and quality control database: with clear historical COA data and packaging photos
How Minmetals Supports Second-Supplier Buyers
Chongqing Minmetals currently offers the following packages suitable for a dual backup/long-term contract structure:
- Spot and futures contract quotes for 441/553
- Customizable particle size, Si ratio, and delivery location (10–100mm / FOB / CIF)
- COA, CO (Certificate of Origin), packing list, and other export documents provided; supports stable monthly deliveries
- Taipei office for real-time communication and delivery monitoring
Stable Prices Don’t Mean Zero Risk — Now Is the Time to Build a Second Supplier
The lesson from 2022 reminds us that risks emerge when “everything seems fine.” Faced with China's silicon overcapacity, aluminum die casting and secondary aluminum plants should rebuild procurement flexibility, ensuring supply security through systems, not just prices.
FAQ: Three Common Questions from Professional Silicon Metal Buyers
Q1: With prices so low now, is a second supplier still necessary?
A: Yes. Stable prices don’t guarantee stable delivery. Especially during export surges or port congestion, a second supplier can ensure uninterrupted supply.
Q2: Can Minmetals supply only spot orders without a long-term contract?
A: Yes. We offer spot lists and small trial orders to fit existing main supplier systems.
Q3: Can you assist with CO, customs declarations, and analysis reports?
A: Yes. We provide complete export documentation including CO, COA, packing list, and bill of lading to meet customs clearance and inspection requirements.
