Silicon

Metal Silicon Recent Commodity Market Dynamics Intelligence, Analysis, and Forecast

I. Market Dynamics Intelligence

(A) Price Trends
1. Recent Price Volatility:
- As of July 28, 2026, the Business Society’s benchmark price for metal silicon stood at RMB 9,300.00 per ton, representing a 0.64% decline from the beginning-of-month price of RMB 9,360.00 per ton on July 1, 2026.
- Between July 1 and July 28, 2026, metal silicon prices exhibited a mild downward fluctuating trend. The lowest price occurred on July 28 (RMB 9,300.00/ton), while the highest was recorded on July 1 (RMB 9,360.00/ton).
2. Regional Price Disparities:
- On July 27, 2026, quotations for Metal Silicon Grade 441# (oxygen-blown, Si content ≥99%) varied across regions: Shanghai—RMB 9,450/ton; Tianjin Port—RMB 9,200/ton; Kunming—RMB 9,450/ton; Sichuan—RMB 9,050/ton; Huangpu Port—RMB 9,350/ton.

(B) Supply Situation
1. Capacity Rationalization:
- Supply-side structural reforms in China’s metal silicon industry continue to advance steadily. Idle capacity inactive for over two years totals more than 520,000 tons, involving approximately 80 furnaces across 11 provinces. Since 2025, the scale of idled capacity has expanded significantly to over 1.9 million tons, covering more than 200 furnaces across 14 provincial-level administrative regions.
- As of June 12, 2026, the national total number of metal silicon furnaces stood at 774, with only 232 operational—yielding an overall furnace utilization rate of merely 30%. Actual effective capacity is substantially lower than nominal capacity, and supply contraction is progressively materializing.
2. Regional Supply:
- Southwest China—the primary production base (Yunnan, Sichuan, Guizhou)—accounts for a disproportionately high share of idled capacity. In 2025, Yunnan ranked first nationwide with 540,000 tons of idled capacity and 70 idled furnaces. Sichuan, Xinjiang, Fujian, and Chongqing also each reported idled capacity exceeding 100,000 tons. Smaller-scale furnaces in the Southwest region were particularly affected; enterprises generally lack economies of scale and cost-control capabilities.

(C) Demand Situation
1. Downstream Industry Demand:
- Polysilicon: With the anticipated implementation of the 2026 “anti-cutthroat competition” policy, polysilicon capacity and output are expected to decline, resulting in slower growth—or even contraction—in demand for metal silicon.
- Organosilicon: Affected by sluggish real estate activity, organosilicon market demand for metal silicon remains broadly flat year-on-year. Weak end-market demand from the real estate sector persists, while non-real-estate demand recovery remains gradual. Limited output growth following recent new-capacity commissioning further constrains incremental demand for metal silicon.
- Aluminum Alloys: Benefiting from robust non-ferrous metal demand, aluminum alloy production—and thus metal silicon demand—is projected to increase year-on-year. Strong non-ferrous consumption supports higher aluminum alloy output; however, marginal demand declines in construction and building materials sectors constrain overall growth potential.

(D) Futures–Spot Relationship
1. Basis Levels:
- From April 24 to July 23, 2026, the basis (spot minus futures) for the industrial silicon (metal silicon) main contract ranged between a maximum of RMB 1,180.00/ton and a minimum of RMB 380.00/ton, averaging RMB 841.92/ton. Basis fluctuations reflect price differentials between spot and futures markets, as well as evolving market expectations.

II. Analysis and Assessment

(A) Reasons for Price Decline
1. Oversupply Pressure: Despite ongoing capacity rationalization, residual oversupply stemming from prior capacity expansion remains unresolved. High inventory levels continue to exert downward pressure on prices.
2. Weak Demand Growth: Demand growth from polysilicon and organosilicon sectors has fallen short of expectations—particularly polysilicon, whose capacity and output are declining due to policy intervention, thereby reducing metal silicon demand. Although aluminum alloy demand shows modest growth, its magnitude is insufficient to offset demand declines elsewhere.
3. Market Sentiment: Market participants—including investors and traders—hold weak confidence in near-term improvements to the metal silicon supply-demand balance, depriving prices of upward momentum.

(B) Causes of Regional Price Differences
1. Production Cost Variations: Electricity tariffs and raw material costs differ across regions, leading to divergent production costs and consequently varying regional pricing. For instance, during the dry season, electricity prices rise in Southwest China, increasing integrated production costs and pushing local prices relatively higher.
2. Transportation Cost Differences: Geographic location and infrastructure quality vary significantly among regions, resulting in differing logistics expenses that influence final delivered prices. Regions closer to end-consumption hubs enjoy lower transportation costs and therefore tend to quote comparatively lower prices.

III. Forecast

(A) Price Trend Forecast
1. Short-Term Outlook: Metal silicon prices are expected to remain range-bound at low levels in the near term, with limited volatility. The twin challenges of oversupply and sluggish demand are unlikely to be fundamentally resolved in the short run, leaving the market without strong catalysts for either significant upside or downside movement.
2. Long-Term Outlook: Over the longer horizon, continued deepening of capacity rationalization—especially accelerated exit of inefficient capacity—will gradually restore supply-demand equilibrium. Consequently, metal silicon prices are likely to stabilize and recover. However, the pace and magnitude of any rebound will hinge critically on the strength of downstream demand recovery and the effectiveness of policy interventions.

(B) Supply-Demand Structure Forecast
1. Supply Side: Capacity rationalization will persist and intensify; furnace utilization rates may gradually improve, yet overall supply growth will remain tightly controlled. Enterprises will increasingly prioritize cost efficiency and product quality enhancement to bolster competitiveness.
2. Demand Side: Polysilicon demand growth will decelerate; organosilicon demand is expected to hold steady; aluminum alloy demand is poised for continued growth. Emerging sectors—including new-energy vehicles and photovoltaics—will incrementally expand metal silicon consumption, becoming pivotal drivers of future demand growth.