The China Silicon Industry Association forecasts a rally in polysilicon prices, a crucial component in solar panels, through the end of the year due to reduced production capacity within the sector. The association highlighted several factors contributing to the decline in output, including seasonal influences like a week-long public holiday in early October and decreased hydropower generation due to drier weather, which has increased power costs. Specific price forecasts were not provided in the statement released on Wednesday.
Since mid-2022, Chinese polysilicon prices have plummeted by 85% due to an oversupply created by an excessive expansion of production capacity. A modest recovery has been observed since late July, as companies began scaling back their output. Notably, Daqo New Energy Corp., the third-largest producer, revised its 2024 production guidance downward following a substantial loss in the first half of the year.
China’s leading solar manufacturing sector is experiencing a phase of consolidation as a result of a severe surplus, which has depressed prices throughout the supply chain, from polysilicon to finished solar panels. While this price drop has benefited clean energy deployment—expected to set new records this year—it has also led to significant financial losses and even bankruptcies within the industry.
Polysilicon producers are hoping for a quicker resolution to the sector’s downturn compared to the broader supply chain, as restarting production after a temporary shutdown incurs high costs. The association noted that most major polysilicon manufacturers are not operating at full capacity and anticipated further production suspensions due to reduced hydropower availability as winter approaches.
