According to China Nonferrous Metals News, since November, as the southwest region entered its dry season, silicon price fluctuations narrowed, maintaining overall volatility between RMB8,800 and 9,400 per ton.

Southwest Production Cuts Drag Down National Output

In October, domestic industrial silicon output reached 404,800 tons, marking a 5.4% month-on-month increase but still down 9.3% year-on-year. Cumulative production from January to October totaled 3.34 million tons, a 16% year-on-year decline. The industry's average operating rate in the third quarter hovered around 65%.

In November, the dry season effect in Southwest China intensified, with electricity prices rising in Yunnan and Sichuan, significantly increasing power costs. Weekly industrial silicon output in these regions has declined consecutively, dropping by approximately 40% compared to late October. In contrast, supply from Northern industrial silicon production areas remains stable, with Xinjiang's weekly output consistently exceeding 50,000 tons since October.

Driven by intensifying losses and increased voluntary production cuts among Southwest enterprises, the national industrial silicon operating rate has fallen below 60%. November output is projected to decline by over 10% month-on-month, reflecting seasonal supply contraction.

Photovoltaic Growth Slows; Diverse Performance Across Other Segments

In recent years, the photovoltaic industry chain has been the core driver of industrial silicon demand, while demand from organosilicon, aluminum alloys, and exports has remained relatively stable.

For polysilicon, since expectations of “anti-internal competition” policies emerged in July, silicon material prices approached 60,000 RMB/ton. Enterprise profits per ton recovered from a loss of RMB5,000 to a current profit of approximately RMB8,000, stimulating sustained production growth.

Data shows N-type re-melting material quoted between ¥49,700–54,900/ton, averaging ¥52,300/ton with prices stabilizing. Notably, the dry season in Southwest China also constrains polysilicon production, with ongoing expectations of output cuts potentially weakening future industrial silicon demand.

In Q3, organosilicon prices rose initially before declining, with overall fluctuations remaining limited. From January to October, domestic organosilicon output reached 2.06 million tons, up 14% year-on-year, but has declined month-on-month for two consecutive months since September. In mid-November, industry conferences reached a consensus on “30% production cuts + a target price of ¥13,500/ton,” driving DMC market prices to surge rapidly from ¥11,000/ton to ¥13,000/ton—a rise exceeding 17%. Market expectations suggest major manufacturers will soon synchronize price hikes of ¥500–800/ton.

Benefiting from peak automotive production and sales, aluminum alloy futures prices hit record highs in early November but recently retreated amid weakening commodity sentiment. From January to September, aluminum alloy output reached 14.116 million tons, up 15.9% year-on-year. According to data from the China Association of Automobile Manufacturers, October automotive production and sales reached 3.359 million and 3.322 million units respectively, up 2.5% and 3% month-on-month. Cumulative production and sales from January to October totaled 27.692 million and 27.687 million units, both exceeding 12% year-on-year growth. Year-end production surges by automakers are expected to sustain tight spot market conditions for aluminum alloy.

High Inventories Suppress Rebound; Cost Support Limited

By mid-November, total industrial silicon inventory exceeded 450,000 tons, accumulating a 23% increase since the beginning of the year. This includes 268,000 tons of manufacturer inventory and 184,000 tons of social inventory, with delivery warehouse receipts reaching 44,000 lots (equivalent to 220,000 tons at 5 tons per lot). With no significant downstream demand growth and supply fluctuations in northern and southern regions offsetting each other, the dual weakness in supply and demand has highlighted the pressure to reduce inventories.

The dry season in the southwest has driven up electricity prices. Industrial silicon electricity costs in Yunnan and Sichuan have generally risen to 0.4-0.48 RMB/kWh, a 40%-43% increase from October, corresponding to an additional power cost of approximately 1,500 RMB/ton. Additionally, prices for auxiliary materials like silicon coal, petroleum coke, graphite electrodes, and silica sand also rose, driven by the third-quarter coal price surge. By mid-November, the full production cost of industrial silicon in Southwest China had climbed to 9,700–9,750 RMB/ton, a 4%–6% month-on-month increase. In Xinjiang, production costs remained relatively stable at around 8,450 RMB/ton.

In the short term, industrial silicon prices may continue to fluctuate within a range. Two key variables warrant close attention: first, whether environmental production restrictions in northern regions will be tightened by year-end; second, whether substantive policies such as “excess capacity stockpiling” in the photovoltaic industry will be implemented. Clear policy signals could provide a critical opportunity to break the current deadlock.

As an integrated internet platform providing benchmark prices,on December 2nd, the benchmark price of silicon metal from SunSirs was 9750.00 RMB/ton, unchanged from the beginning of the month.

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