No, I'm not talking about sand as a reagent (although it will
definitely be possible later because of the glass furnace), but as a product.
I did a bit of Wiki-reading and look what we've got here:
The smelter cannot look inside containers for reagents; this means not only bins and barrels, but bags, coffers, et cetera. In practice this makes it seemingly impossible to use extracts of any sort (liquid, powder, and so on) in smelter reactions. It likely won't show up on the job list at all and, if it does, will result in immediate cancellation when a dwarf tries to select it from the job queue. Extracts can be the product of a reaction but since they must be stored, they will immediately be "spilled" upon creation and be impossible to store and use.
The bold stuff is the interesting stuff. ^^
The question is: What means "spilled"? I doubt it will turn the surface the smelter is standing on to turn into a surface functioning as a sand source, but the sand has to be somewhere.
The reaction would be like this, i guess:
[REACTION:STONE_TO_SAND]
[NAME:make sand from stone]
[SMELTER]
[REAGENT:1:STONE:NO_SUBTYPE:STONE:NO_MATGLOSS]
[PRODUCT:100:1:SAND:NO_SUBTYPE:SAND:NO_MATGLOSS]
Maybe, it's "POWDER_MISC" as an item token, but "SAND" seems quite reasonable.
On the other hand, we're talking about Dwarf Fortress here...