Silicon metal spot market has recently shown continued weakness with significant downward price pressure. As a professional supplier in metallurgical and new energy materials, Henan Fengyang provides the following analysis of key factors affecting the current Silicon metal market based on spot market fundamentals:
1. High Inventory Levels Highlight Supply Glut
Silicon metal market faces substantial inventory pressure:
- Persistent inventory accumulation: Major warehouse stocks remain elevated with slowing destocking rates;
- Sluggish warrant clearance: Reduced spot circulation efficiency reflects weak downstream demand absorption;
- Deepening supply-demand mismatch: Current inventory levels could cover over one month of normal consumption, exacerbating oversupply concerns.
High inventories directly suppress spot price recovery, with seller offers continuing to soften.
2. Enhanced Supply Elasticity with Rising Production
Improved operating conditions are boosting output:
- Southwest China wet season effect: Adequate hydropower in Yunnan/Sichuan has increased local plant utilization;
- Weekly production growth: Industry-wide operating rates up ~3 percentage points month-on-month;
- New capacity coming online: Restarted furnaces post-maintenance add ~200 MT/day.
Additional supply coupled with high inventories has intensified bearish sentiment.
3. Persistent Demand Weakness with Solar Policy Impact
Downstream sectors fail to provide adequate price support:
- Sluggish solar segment: Policy adjustments have slowed polysilicon producers' procurement;
- Flat aluminum alloy demand: No seasonal peak in automotive/construction applications;
- Export market contraction: Overseas buyers aggressively negotiate lower prices, with FOB offers down 2.5% weekly.
Weak demand cannot absorb existing supply, driving spot transaction prices lower.
Henan Fengyang Market Insight & Procurement Advisory
Short-Term Outlook
Silicon metal prices may maintain weak fluctuations. Recommended strategies:
- Inventory control: Prioritize existing stock drawdown over new purchases;
- Supply monitoring: Track production stability during Southwest wet season;
- Demand tracking: Assess Q3 solar policy implementation impacts.
Our Value Proposition
Leveraging deep spot market expertise, we provide clients:
- Real-time analytics: Warehouse stocks/operating rate data-driven insights;
- Cost-optimized sourcing: Upstream-downstream integrated procurement;
- Risk alerts: Early identification of price inflection points.
We remain committed to delivering actionable intelligence for informed decision-making.
