The price of polysilicon — a key ingredient in solar panels — should rally through the year-end as producers cut capacity due to a slump in the sector, the China Silicon Industry Association said.
The declines in production are being abetted by seasonal factors including a week-long public holiday in early October and drier weather reducing hydropower output and pushing up power costs, the association said in a statement on Wednesday. It didn’t give a specific price forecast.
Chinese polysilicon prices have tumbled 85% since mid-2022 due to a major build-out of factories that was far more than the market actually needed. There’s been a modest recovery since late July, as companies started to dial back output. Daqo New Energy Corp., the No. 3 producer, cut its output guidance for 2024 after posting a massive first-half loss.
China’s world-leading solar manufacturing industry is going through a consolidation due to a severe glut, which has driven down prices across the supply chain, from polysilicon to finished panels. That’s been a boon for clean energy deployment, with the world expected to hit another record this year, but it’s causing major losses and even bankruptcies.
Polysilicon makers will be hoping that the shake-out in their sector happens faster than the rest of the supply chain because costs to restart production after a temporary halt are high.
Most major polysilicon producers are not operating at full capacity, the association said. More plants are likely to suspend production as their key energy source, hydropower, becomes less plentiful due to drier weather as winter approaches, it said.
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