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Introduction
Low prices are not always a good thing. When silicon metal prices drop sharply, it is often not good news for buyers but a signal of higher risks. This article examines hidden risks masked by low prices from the practical needs of aluminum plants, helping you build a more resilient procurement strategy.
1. Quality Risk: Composition Deviations and Rework Costs
When suppliers cut prices, they are likely reducing quality control costs, leading to discrepancies between COA (Certificate of Analysis) and actual composition. If Si content is 1% lower than the contract and Fe is 0.1–0.2% higher, it can cause furnace blockages, surface defects, and even degrade alloy performance. Studies show that even slight Fe variations can reduce mechanical strength and ductility of aluminum alloys (Source: Research on Silicon Impurities).
2. Delivery Risk: Low-Priced Goods Arrive Slowly
Low prices often come from overcapacity small plants, which may face port access issues, lack export warehousing, or fail to guarantee continuous supply. According to SMM, in 2023 export scheduling delays reached 18%, with small-lot contracts promised in 10 days actually taking 20+ days (SMM report). For aluminum alloy plants, material shortages mean production stops, with daily losses reaching tens of thousands of USD.
3. Inventory Risk: Overstocking Creates Cash Flow Pressure
During low-price periods, buyers may over-purchase, building hundreds of tons in stock. However, accumulated storage and financing costs eat into any potential profit. If market prices rise but the plant cannot sell quickly, it may result in “buying high, selling low.” It’s recommended to use a monthly average inventory model, keep spot purchases below 20%, and stagger purchases to reduce risk.
Suggested Strategy Table
| Risk Type | Suggested Countermeasure |
|---|---|
| Quality Risk | Sign COA composition guarantee clauses and retain third-party sampling rights |
| Delivery Risk | Adopt “main supplier” long-term contracts + “spot” backup sourcing |
| Inventory Risk | Stagger purchases, control spot proportion, and manage inventory age |
Why Choosing a Reliable Supplier Matters
Suppliers like Chongqing Minmetals (CMETC), with export qualifications and long-term credibility, can provide COA, composition guarantees, and delivery control mechanisms under FOB/CIF/EXW terms. They also define quality and delivery compensation clauses in contracts, ensuring both spot flexibility and long-term stability.
🔗 Related Reading
- Silicon Metal Price Trends and Analysis: Silicon Metal Prices
- Building Second-Supplier and Supply Chain Backup Strategies
FAQ: Common Industry Questions
Q1: Should I buy whenever the price is lower than the market?
A: Not necessarily. Low prices may indicate quality risks, unstable delivery, or inventory pressure. A “long-term + spot backup” strategy is recommended.
Q2: How can I verify the authenticity of COA composition data?
A: Buyers can compare COA data with blind testing from third-party labs to ensure acceptance quality.
Q3: Which suppliers can balance composition, delivery, and price?
A: Reliable suppliers with export capacity, COA certification, and a track record of monthly shipments — such as Minmetals — are common choices for industry experts.
