Supply: In 2023, China's annual silicon metal production was 3.8 million mt. From January to August 2024, cumulative production reached 3.24 million mt, up 41% YoY. For the entire year of 2024, domestic silicon metal supply is expected to exceed 4.9 million mt. Including silicon metal (Si≥97%) and secondary silicon, total annual silicon supply is projected to be around 5.65 million mt, up 28% YoY, an increase of 1.23 million mt.
As of the end of July 2024, domestic silicon metal capacity was 6.78 million mt (based on 300 days), an increase of 1.8 million mt or 36% from the end of 2021. According to the silicon metal commissioning plan at the end of 2023, over 1 million mt of new silicon metal projects are expected to be commissioned in 2024, with this capacity to be released in 2025. The certainty of silicon supply growth in 2025 is strong, potentially accelerating industry efficiency and cost reduction, optimizing less competitive capacities.
Inventory: SMM statistics show that as of September 20, national social inventory of silicon metal totaled 477,000 mt, with 134,000 mt in general warehouses and 343,000 mt in delivery warehouses. According to data from the Guangzhou Futures Exchange, as of September 19, silicon metal warehouse warrants totaled 60,803 lots or 304,000 mt, a decrease of 7,284 lots or 36,000 mt from the peak on August 8.
From the supply-demand structure, in Q3 2024, high supply levels led to inventory accumulation, with the reduction in production in Sichuan and Yunnan in November-December expected to narrow the accumulation. The change in delivery requirements may limit the liquidity of some inventories, alleviating supply pressure to some extent.
Downstream Demand
Exports: In 2023, China's cumulative silicon metal exports were 573,000 mt, down 12% YoY, with total imports at 7,000 mt, down 78% YoY. From January to August 2024, cumulative exports reached 484,000 mt, up 28% YoY, with full-year exports expected at 720,000 mt; cumulative imports were 20,000 mt, up 369% YoY.
Polysilicon: According to an SMM survey, in 2023, China's polysilicon silicon consumption was 1.81 million mt, with a YoY consumption growth rate of about 26% expected in 2024. By the end of 2023, China's polysilicon capacity was 2.14 million mt, expected to reach around 2.93 million mt by the end of 2024, a YoY growth rate of 37%. In 2023, China's polysilicon production was 1.5 million mt, with production expected to decrease to around 1.85 million mt in 2024 due to increased shutdowns in Q3.
Silicone: According to an SMM survey, in 2023, China's silicone industry silicon consumption was 1.17 million mt, with a YoY consumption growth rate of 14% expected in 2024. By the end of 2023, China's silicone capacity was 5.94 million mt, with an average operating rate of about 78%. In 2024, new capacity plans are clear at 2.58 million mt/year. As of September, 500,000 mt of capacity has been released domestically, with 380,000 mt in trial production and 500,000 mt in the final construction phase, with other capacity plans underway.
Aluminum-Silicon Alloy: In recent years, automotive lightweighting has gradually gained attention, supporting steady growth in silicon consumption for aluminum-silicon alloys. In 2023, the theoretical profit per ton for the ADC12 industry was in the range of 50-150 yuan. In H1 2024, the national weighted average cost for ADC12 was 19,693 yuan/mt (including tax), with the industry at the break-even point. After 2024, silicon prices continued to decline, with the price of above-standard #553 silicon metal falling over 18% from the beginning of the year, reaching a four-year low, reducing the cost per ton of ADC12 by 120-200 yuan. The proportion of silicon in the total cost of ADC12 continued to decrease to 3.8% in H1.
Due to concerns about downstream consumption growth, silicon metal demand growth could come under pressure in 2025. From H2 2023 to H1 2024, polysilicon demand was strong, with monthly demand for silicon metal reaching 220,000 mt. As polysilicon capacity shutdowns increased, monthly demand for silicon metal fell to less than 160,000 mt by the end of Q3. The listing of polysilicon futures may boost demand to some extent, but considering end-user installation demand, the YoY growth rate for domestic polysilicon consumption in 2025 may fall to around 3%-5%. Silicone consumption YoY growth is also expected to be below 5%. More drivers are needed for silicon metal demand growth in 2025.
Silicon metal fundamentals need time to improve, with mixed factors making it difficult for silicon prices to experience significant volatility. Silicon companies in Sichuan and Yunnan are expected to begin reducing production at the end of October, with reductions expanding in November-December, while northern silicon companies are expected to maintain high operating rates. There is an expectation of reduced supply in Q4, but whether the industry can destock depends on the demand increase from polysilicon companies resuming production.
Based on the end-of-November centralized warehouse warrant cancellation system, silicon metal warehouse warrants slowly decreased in August-September, alleviating some pressure, but short-term market impact concerns remain.
![[Revisión diaria del precio del ADC12] Los futuros del aluminio fluctúan en máximos; el ADC12 al contado se consolida con firmeza](https://imgqn.smm.cn/usercenter/FHiZE20251217171722.jpeg)
