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As global aluminum demand continues to soar, driven by industries such as construction, transportation and packaging, the role of silicon metal, especially silicon metal 421, is gaining more and more attention. This growth is mainly driven by the booming electric vehicle market and the ongoing trend towards lightweight materials, which requires high-quality aluminum alloys.

Currently, the metal silicon industry faces many challenges, including imbalance between supply and demand, sharp price fluctuations, and weak demand growth. Oversupply and high inventory levels in the market have led to sharp price fluctuations. The lack of growth momentum in major downstream industries such as polysilicon, silicone, and aluminum alloys has exacerbated market fluctuations.

As the world moves towards a more sustainable future, the metal silicon industry is about to face major changes, especially the EU Carbon Border Adjustment Tax (CBAM) which will be implemented in 2026. This regulation aims to create a level playing field for European companies by imposing tariffs based on the carbon emissions of imported goods. As a result, companies are forced to accelerate the transition to green electricity, which will have a profound impact on the production and export of metal silicon.

At present, the supply and demand of the metal silicon market is seriously unbalanced, and the social inventory has exceeded 610,000 tons. The expected release of production capacity during the flood season in the southwest region has exacerbated the oversupply situation, resulting in continuous fluctuations at the bottom of the market. For this reason, polysilicon companies have taken measures to reduce production in an attempt to stabilize prices. However, the pace of destocking is still slow, and the industry's self-discipline measures have achieved little effect.

As we delve deeper into the metal silicon market in early April 2025, the supply and demand dynamics present a complex picture. The latest data from Baichuan Yingfu shows that furnace operations have been significantly reduced, with only 221 furnaces in operation as of April 3, with an overall operating rate of 27.94%. This is 13 units less than the previous week, mainly due to production cuts at large factories in Xinjiang and sporadic shutdowns in other regions.

As we delve deeper into the world of metal silicon, the latest data from Baichuan and SMM reveal important trends in inventory levels and production costs that are shaping the industry landscape. In the first week of April 2025, social inventory of industrial silicon reached 608,000 tons, an increase of 4,000 tons from the previous week. This increase is worth paying attention to, especially because it reflects the continued fluctuations in market supply and demand.

The current supply and demand balance in the metal silicon market is weak and is expected to continue in the short term. 

The metal silicon production landscape shows significant differences between companies of different sizes and geographical locations.

The silicon metal industry is currently going through a period of volatility, as highlighted in recent reports from Sina Finance and Baichuan Yingfu. As of March 6, 2025, the number of silicon metal furnaces in operation in China was 237, with activity slightly reduced and the overall furnace operating rate at 31.35%. 

The metal silicon market is currently experiencing a complex situation, mainly manifested in the sluggish polysilicon production and the sluggish demand for industrial silicon.