SunSirs: Silicon Price Logic in 2025 and Supply and Demand Outlook for 2026

Market Analysis of Silicon in 2025

1. Price trend description

According to data from SunSirs' monitoring system, the market price of Silicon (441#) in 2025 showed an overall trend of initial decline followed by fluctuations at a medium-to-low level. On January 1, 2025, the reference market price of Silicon (441#) was 11,690 RMB/ton, and on December 31, 2025, the reference market price was 9,620 RMB/ton, representing a 17.71% decrease over the year. The highest price during the year was 11,690 RMB/ton, and the lowest price was 8,620 RMB/ton, with a fluctuation range of 26.26%.

From January to June 2025, the domestic Silicon market showed a trend of "continuous decline with slight fluctuations at the bottom." The market focus for Silicon continuously shifted towards lower price levels. Taking 441# oxygen-blown Silicon (silicon content ≥99%) as an example, the market slowly declined from January to March, with prices falling below 10,000 RMB/ton. From April to June, the market accelerated its decline, with prices continuing to fall. By the end of June, the price of Silicon had dropped to its lowest point of the year, reaching approximately 8620 RMB/ton, representing an overall decrease of 26.26% in the first half of the year.

From July to December 2025, the domestic Silicon market experienced a narrow recovery, but the rebound was limited. The market fluctuated at a low to medium level, with prices ranging from 8,700 to 9,700 RMB/ton, and the downward trend ended towards the end of the year.

2. Analysis of market influencing factors

Supply-demand imbalance was the core factor affecting the trend of the Silicon market

In the first quarter of 2025, although some Silicon factories experienced temporary production cuts, downstream restocking demand was in a lull. Coupled with delayed production cuts at some factories in Xinjiang, March saw the commissioning of new production capacity and expectations of increased supply. Industry inventories continued to accumulate, increasing supply pressure, and the market exhibited pessimistic sentiment. From April to June, market demand failed to recover significantly, and the prices of downstream polysilicon and silicone collapsed simultaneously. The market focused on expectations of declining demand. The increased operating rates of factories in Xinjiang further exacerbated supply pressure, leading to a clear supply-demand imbalance and a rapid decline in prices.

In July, production decreased in some regions, and the reduced supply of Silicon supported a market recovery. However, the impact on demand was limited, and the market lacked sufficient momentum for a sustained rebound. In August and September, market prices fell back to a low-to-medium range. From October to December, the Silicon market was generally characterized by weak supply and demand, resulting in narrow price fluctuations and a weak trend towards the end of the year.

Metal Silicon Market Outlook for 2026

Supply side

1. Production capacity

From 2021 to 2024, China's Silicon production capacity steadily increased. In 2025, Silicon production capacity continued to expand, reaching approximately 7.846 million tons, a year-on-year increase of 8.94%. In 2026, the supply side of silicon is expected to see a slight expansion, with the focus of capacity expansion shifting towards the northwest region. However, the new capacity will be limited, estimated at around 700,000 tons, mainly from previously uncommissioned projects. The scale of new capacity is relatively controllable, and the situation of overcapacity is unlikely to be fundamentally reversed in the short term.

2. Production Volume

In the first three quarters of 2025, the production of silicon was approximately 3.328 million tons, a year-on-year decrease of 10.8%. In the fourth quarter, the market showed weak supply and demand, resulting in poor production growth. Overall, the production of silicon in 2025 showed a decline. This decline in production was mainly due to overcapacity, weak demand, and production cuts implemented to alleviate market pressure.

However, in 2026, there is still a possibility of a slight increase in national silicon production.  It is estimated that industrial silicon production in 2026 will be in the range of 4 to 4.4 million tons. On the one hand, production in the northwest is increasing, while production in the southwest is limited due to costs and policy constraints. If industry capacity reduction and production cut policies are implemented, the increase in production will be limited. On the other hand, if companies are stimulated by price increases and new capacity is released, production may increase. However, under the dynamics of supply and demand, companies' willingness to increase production may also become more rational.

Regarding demand:

In 2025, the overall demand for silicon was weak. In 2026, among the three major downstream applications of silicon, only the aluminum alloy sector is likely to provide some demand stimulus to the market. Let's take a closer look at these three areas:

1. Polysilicon Sector

In 2026, with the expected implementation of "anti-overcapacity" policies, polysilicon production capacity and output are projected to trend downwards. The market is likely to experience a supply contraction. Reduced production, coupled with continued demand, will dampen the demand for raw material Silicon. Therefore, the growth rate of polysilicon demand for silicon is expected to slow down or even decline in 2026.

2. Silicone Industry

Affected by the weak real estate market, the demand for silicon in the silicone industry in 2026 is expected to remain largely unchanged compared to 2025. While end-use demand from the real estate sector remains weak, the recovery in non-real estate demand continues to slow. Although the industry previously implemented production cuts to support prices, the concentrated commissioning of new capacity and subsequent limited production growth will likely prevent any significant increase in demand for silicon, maintaining a relatively stable scale.

3. Aluminum Alloy and Other Fields

In 2026, driven by increased demand for non-ferrous metals, the demand for silicon in fields such as aluminum alloys is expected to increase year-on-year. Strong non-ferrous metal consumption will lead to a recovery in aluminum alloy production; however, declining marginal demand from the construction and building materials sector will limit the growth rate. This will provide some positive impetus to the demand for Silicon, but the overall contribution will be limited.

Summary

The core contradiction in the Silicon market in 2025 was the "supply-demand imbalance." The mismatch between ample supply and weak demand was putting pressure on the market, resulting in insufficient support for silicon prices, which declined in a stepwise manner before stabilizing at a low level. In 2026, the supply pattern of the silicon market will still show regional differentiation. In the short term, high inventory levels and the pressure from newly released production capacity will persist, and the recovery of downstream demand will take time. In the long term, attention should be focused on the pace of demand support from strategic sectors such as photovoltaics and new energy vehicles, as well as the impact of policy implementation, production cuts by companies, and fluctuations in raw material prices on the market.

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