Silicon metal prices are stuck in a narrow range near multi-year lows. China domestic #441 grade was trading at approximately $1,450-1,500 per metric ton (9,100-9,300 RMB/t) in late July, down roughly 5% year-on-year, according to SMM data. The international price differential remains wide: Northeast Asia spot prices sit around $1,500/t, Europe at $1,890/t, and North America at $2,750/t, reflecting the impact of antidumping duties and freight costs.
The global market is oversupplied. China produced 358,400 metric tons of silicon metal in June 2026, unchanged from the prior month, according to SMM. The H1 review showed overall capacity utilization among China's top six producers running at low levels, with total supply broadly matching the weak demand environment. Yunnan and Sichuan provinces have restarted furnaces with the arrival of the rainy season and cheaper hydropower, but SMM notes that Sichuan's H1 output was still 40% lower year-on-year, suggesting a net supply reduction versus 2025 despite the seasonal restarts.
Market concentration is rising. The top six Chinese producers now account for 77% of domestic supply, up from 68% in 2024. This concentration gives larger players pricing power during downturns - they have cut utilization rather than slash prices to move volume, which explains why the price decline has been only 5% despite persistent oversupply.
Demand is mixed across end uses. The poly silicon segment, which consumes silicon metal for solar panel manufacturing, has provided a steady demand floor. Global solar installations are projected at 650 GW in 2026, up from 580 GW in 2025, supporting poly silicon output. But poly silicon producers have built their own inventory buffers and are buying on shorter contract cycles, removing the forward ordering that historically supported Q2 pricing.
Aluminum alloy demand, the second-largest end use, is tracking construction and automotive output. Global aluminum production rose 2.3% in H1 2026, driven by Chinese output increases, but Western aluminum smelters continue to operate at reduced capacity due to energy costs. The net effect is flat-to-slightly-negative silicon demand from the alloy sector versus 2025 levels.
Chemical-grade silicon demand (for silicones and silanes) is growing at 3-4% annually, but this segment represents only about 20% of total silicon metal consumption, insufficient to absorb the excess supply from the metallurgical-grade market.
Analyst views. SMM expects prices to remain range-bound for the remainder of Q3, with a potential modest recovery in Q4 as aluminum alloy buyers restock ahead of year-end production targets. CRU Group forecasts 2026 average #441 pricing of $1,500-1,700/t for China domestic, noting that prices below $1,500/t are below the marginal cost curve for most non-hydropower producers in China, which should limit further downside. IMARC assessments show an uptrend in Q2 versus Q1 across all regions, but the move has been modest.
The bull case: supply discipline. If Chinese producers continue to restrain utilization at current levels, the market could tighten significantly in H2 as poly silicon demand absorbs more material. The bear case: Yunnan's full rainy-season production coincides with a seasonal slowdown in European and North American buying through August, creating a temporary supply glut that could push China prices below $1,400/t.
For CPOs sourcing silicon metal, the current market offers a rare alignment of low prices and adequate availability - but with a clear time horizon. Prices below $1,500/t for #441 grade are below the cost of production for non-subsidized Chinese producers, and the concentration of capacity among the top six producers creates a coordinated supply response that prevents a deeper collapse. Buyers with multi-year contracts should consider locking in 12-month volumes at current levels, with a price collar tied to SMM or Fastmarkets indices to limit both upside and downside exposure. The poly silicon demand floor is real: solar installations are growing, and each GW of capacity consumes approximately 3,000-4,000 metric tons of silicon metal. By 2027, poly silicon alone could absorb over 40% of global silicon metal output, potentially pulling the market into balance. Buyers should maintain 30-45 days inventory through August, then increase to 60 days heading into Q4 when alloy restocking typically tightens availability.