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Introduction
Why is silicon metal in oversupply? Since Q2 2024, this has been a key question for aluminum alloy buyers. While prices have rebounded slightly in the short term, overall supply still far exceeds actual demand. Tracking data from Asian Metal and SMM reveals three major roots of this oversupply situation.
Low Prices Without Real Production Cuts
According to the silicon metal 3-3-03 price trend, spot prices briefly rebounded since July 2024 but remain in a downtrend. Even when quotes fell below some production costs, major producers maintained shipments to defend market share rather than cutting output. This “price not broken, inventory still rising” pattern is the first signal of a supply-demand mismatch.
More Producers Restarting, Adding Supply Pressure
Asian Metal’s “Number of Chinese Silicon Metal Producers Halted by Province” data shows shutdown numbers declining since July 2024, meaning more plants are restarting. Increased production in Ningxia, Sichuan, and Yunnan pushed total operating capacity back up to over 90% of annual peak, flooding the market and accelerating oversupply.
Export Markets Restricted: Anti-Dumping Impact Expands
In 2021, the US ITC ruled in favor of anti-dumping measures on silicon metal imports from Malaysia, Iceland, and Kazakhstan, imposing duties (Asian Metal). This policy limited Chinese silicon exports via third-country routes and raised export barriers. Meanwhile, shrinking orders from Japan and Korea left more material stuck in the domestic market, creating a “blocked export + domestic stockpile” structural pressure.
Three Structural Oversupply Factors Table
| Category | Description |
|---|---|
| Price Structure | Stopped falling but without volume recovery; quotes stuck in low-activity zone |
| Production Momentum | Shutdowns down, operating rate up to 90% |
| Export Restrictions | US anti-dumping + weaker Japan/Korea demand limit exports |
🔗 Sources
- Asian Metal: Silicon Metal Prices & Shutdown Stats
- SMM: Silicon Metal 441/553 Prices & Capacity Report
FAQ
Q1: If prices have dropped, why is there still oversupply?
A: Output hasn’t decreased; operating rates have risen. Prices only stopped falling temporarily without matching demand recovery.
Q2: How long will US anti-dumping measures affect Chinese silicon metal?
A: Under US trade rules, such measures typically last at least 5 years and can be extended, posing long-term risk to exporters.
Q3: How to judge if supply-demand will reverse?
A: Watch “number of operating plants + port storage + quote-to-transaction ratio.” All three dropping together suggests a potential reversal.
Conclusion: Risk Comes from Supply’s Reluctance to Cut
Silicon metal’s surface stability masks unresolved structural oversupply. For buyers, the priority isn’t chasing the lowest price but avoiding “price without volume” and “false quotes.” The next market shift will depend on who truly cuts production and clears inventory effectively.
