Metal Silicon Market Dynamics: Output Rebounds While Supply Uncertainties Loom

Production Highlights

China’s metal silicon output reached 327,700 metric tons (mt) in June 2025, reflecting a 6.5% month-on-month (MoM) recovery but a steep 27.7% contraction year-on-year (YoY), according to the latest data from SMM. Cumulative production for the first half of 2025 stood at 1.8728 million mt, down 17.8% YoY.

Regional Supply Dynamics

July output is projected to increase further in key hydropower-dependent regions:

• Yunnan:Entering peak wet season, silicon producers in Baoshan and Dehong are executing restart and capacity ramp-up plans, contributing an estimated >10,000 mt MoM increment.
• Sichuan:Production growth is expected to moderate after recent increases.
• Northern China:Operations remain largely stable, but uncertainty persists around the restart timeline of a major facility in Xinjiang. This delay could significantly influence July’s national supply outlook.

Demand Sector Analysis

Downstream consumption exhibited robust growth in key sectors:

1. Polysilicon:Output rose 5% MoM to 101,000 mt in June. July production schedules indicate a further 6% increase to ~107,000 mt, driven by restarts in Southwest China’s solar-grade silicon capacity.
2. Silicones:Production surged 13.8% MoM to 209,000 mt in June, with July output forecasted at ~213,000 mt.
3. Combined Consumption:Polysilicon and silicones sectors are projected to drive a ~10,000 mt MoM increase in metal silicon demand for July.

Alloy Sector Weakness

Primary aluminum-silicon alloy producers saw operating rates decline to 50.9% in June amid softening orders. Recycled alloy producers recorded a marginal uptick to 53.3%. Both segments face potential rate reductions in July due to seasonal demand weakness in downstream manufacturing.

Inventory & Supply-Demand Balance

SMM data reveals a shift from inventory accumulation in Q1 2025 to destocking in Q2, resulting in a broadly balanced H1 market. July’s equilibrium remains contingent on Xinjiang supply resumption:

• Scenario 1 (Delayed Restart): Market could extend destocking by ~20,000 mt.
• Scenario 2 (Prompt Restart):Increased supply may pressure inventory levels.

Supply Chain Implications

While Southwest China’s seasonal output surge provides near-term supply relief, unresolved production constraints in Xinjiang continue to inject volatility risk into the market. Downstream demand growth from renewable energy and chemical sectors offers partial counterbalance, though alloy segment softness presents headwinds. Market participants are advised to monitor Xinjiang operational updates closely for directional cues.

*(Source: All data and analysis derived from www.smm.cn)*