In late April, the domestic silicon (industrial silicon) market returned to a weak consolidation phase following an earlier temporary rebound, amid a complex interplay of factors including marginal cost support, limited supply contraction, weak downstream demand and high social inventories. Overall, the market exhibited a pattern of low-level fluctuations with limited upside potential. Based on SunSirs’ official benchmark price of 23 April and the latest industry insights, the price transmission logic between upstream and downstream sectors and the market dynamics are summarized as follows.

I. Price Trends for Core Products (SunSirs 23 April Benchmark Price)

Silicon (441#)

Benchmark price on 23 April: 9,390.00 RMB/ton

Compared to 1 April (9,470.00 RMB/ton): -0.84%

Compared to 1 March (9,540.00 RMB/ton): -1.57%

Downstream polysilicon prices continue to weaken, whilst silicone DMC remains at low levels; silicon procurement is driven primarily by immediate demand. On 23 April, the benchmark price for polysilicon, according to SunSirs, was 35,866.67 RMB/ton, whilst the benchmark price for silicone DMC was 14,500.00 RMB/ton.

II. Key Factors Behind Upstream and Downstream Price Movements

1. Cost Side: Raw Material Prices Steady with Upward Trends, Providing Only Weak Support at the Bottom

Silicon production costs are primarily composed of electricity, petroleum coke and coking coal. Recently, prices for petroleum coke and coking coal have remained relatively firm, driving industry costs to rise slightly. Current prices are now approaching the cash cost threshold for some enterprises, strengthening their willingness to defend prices and providing some protection against further declines. However, against a backdrop of generally ample supply and persistently weak demand, the cost side can only slow the downward trend and is unlikely to drive a sustained upward movement; instead, it continues to squeeze corporate profit margins.

2. Supply Side: Production Contraction at Low Levels, Overall Supply Remains Abundant

The supply side presents a pattern of loss-driven production cuts, low operating rates, and an overall surplus. Persistent industry losses have dampened companies’ willingness to operate, with domestic furnace utilization rates remaining low and output declining in major production regions such as Xinjiang. However, with the rainy season approaching in the south-west, market expectations for subsequent production resumption are strong. Coupled with high inventory levels from earlier periods, although supply has contracted, it has not resulted in a substantive shortage, thus providing limited support for prices.

3. Demand Side: Overall Weakness in Downstream Sectors, Insufficient Support from Essential Demand

Persistent weakness on the demand side remains the key factor suppressing prices. Whilst operating rates in the primary downstream polysilicon sector have remained stable, prices have continued to weaken, leading to essential-need procurement of raw silicon and significant pressure on prices; in the silicones sector, prices have fallen and operating rates have declined, resulting in reduced procurement of raw materials; and in the aluminium alloy sector, demand has remained stable, failing to generate incremental traction. Overall downstream demand is weak, procurement pace has slowed, market transactions are sparse, and silicon lacks the momentum for sustained price increases.

4. Inventory: High market inventories and significant pressure to reduce stock

Inventory pressures continue to weigh on the market. Current market inventories of silicon remain at high levels; whilst on-site factory inventories have fallen slightly, market inventories have accumulated significantly, and the supply of spot goods in circulation is ample. With high inventory levels, traders are keen to offload stock, creating significant resistance to price rises and severely limiting the scope for a rebound.

III. Market Landscape and Impact on the Supply Chain

The current silicon market is characterized by a fragile equilibrium of weak supply and demand, high inventory levels, and weak cost support, with limited scope for price movements in either direction. Profits are shifting downstream along the supply chain; upstream silicon producers are seeing their losses widen, and production enthusiasm continues to be dampened. Downstream in the polysilicon and silicone DMC sectors, cost pressures have eased slightly, but sluggish demand has led to a generally lackluster performance across the industry. Market sentiment is heavily characterized by a wait-and-see attitude, with transactions primarily consisting of small orders driven by immediate needs, and price fluctuations narrowing.

IV. Outlook

In the short term, silicon prices are expected to continue fluctuating at low levels and consolidating on a weak trend, with extremely limited upside potential. Cost support and supply contraction provide a floor, but high inventory levels and weak demand continue to cap the extent of any rebound. In the medium term, three key variables warrant close attention: firstly, the pace of production resumption by enterprises in the south-west during the wet season, which will directly impact the increase in supply; secondly, the recovery of demand in the polysilicon and silicone DMC sectors, as a rebound in demand is key to price stabilization; and thirdly, the extent to which fluctuations in raw material prices support the cost side.

Overall, the fundamentals of the silicon market have not seen any substantial improvement, and the pattern of loose supply and demand persists. In the short term, the market is expected to continue its weak consolidation; in the medium term, a gradual reversal of the weak trend will require effective inventory drawdown and a recovery in downstream demand.

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