Recently, the price of polysilicon has fallen below an important mark of 100 CNY per kg, attracting market attention. Data from China’s Silicon Industry Association showed that polysilicon prices have entered a downward trend since March, and have accelerated their decline since May.
Several industry insiders told Solarbe reporters that polysilicon prices have not yet hit rock bottom. In the second half of the year, polysilicon prices may break through the industry’s average cost line, triggering a new round of restructuring and accelerating the transformation of enterprises from producing p-type polysilicon to n-type polysilicon.
Prices Below 100 CNY per Kg
The latest data from the Silicon Industry Association shows that the average transaction price of n-type polysilicon in China is 103.9 CNY per kg, and the average transaction price of polysilicon prime for mono is 95.9 CNY per kg.
Reporters noticed that polysilicon prices have been on a downward trend since March, with the average transaction price falling by more than 10% for four consecutive weeks since May. The average transaction price of polysilicon prime for mono, in particular, fell by 43.13% cumulatively in May, and the first week of June saw a further decline of 16.68%.
Shi Zhenwei, chief PV analyst at Shanghai Nonferrous Network, told reporters that the root cause of the price drop is oversupply. “Although this year’s global PV installation demand is expected to be raised to 370-380 GW, polysilicon production capacity is still seriously surplus. This year, the overall polysilicon production capacity will reach about 2.4 million tons, nearly double on a year-on-year basis, which can basically meet the demand for 530 GW solar installations.”
Recently, polysilicon companies have faced increased inventory pressure and have become the trigger for accelerated price declines, as companies choose to sell off in order to ease inventory pressures. Shi Zhenwei revealed that the overall polysilicon inventory level has exceeded 130,000 tons recently, with some first-line companies having inventory levels exceeding 30,000 tons.
“The price reduction of silicon wafers also further forces down the price of polysilicon.” Xu Fei, partner at Inno Investment Bank, told reporters.
Longi Green Energy’s latest wafer prices announced on May 29 fell by about 30% compared to the previous announcement on April 27; TCL Zhonghuan’s latest wafer prices released on June 1 were between 16% and 24% lower than its prices on May 11.
Xu Fei said that while silicon wafers reduce their inventory through price reductions, the demand for polysilicon by silicon wafer companies is weakening, further pushing down the price of polysilicon.
Intensifying Industry Competition
“At present, the polysilicon price has fallen to the range of 80-90 CNY per kg, and the cost of polysilicon enterprises is about 50 CNY per ton. The gross profit margin is still considerable. With the release of capacity from players who entered the industry last year, prices will continue to fall in the second half of the year, and may even fall below the cost line of enterprises.” Xu Fei told reporters.
The Silicon Industry Association predicts that with the release of new polysilicon production capacity in June, total polysilicon production will reach around 125,000 tons. The price and operating rate of silicon wafers may continue to decline, further intensifying the oversupply of polysilicon.
Improving Proportion of N-Type Polysilicon
It is worth noting that the PV industry is rapidly upgrading its technology from p-type to n-type, unlike in previous cycles.
“Cost reduction will be one of the main themes for polysilicon enterprises,” Xu Fei said. When profits in the polysilicon industry are high, companies lack the motivation to reduce costs through refined management.
As competition in the industry intensifies, companies with better cost management will have a competitive advantage, while second- and third-tier companies may be squeezed out of the market. At the same time, companies are being pressured to upgrade to n-type silicon materials to improve their competitiveness.
Public information shows that n-type silicon material production requires higher processing requirements and has higher demands for oxygen and carbon content, silicon purity, and silicon breakage level. Shi Zhenwei told reporters that currently, first-tier polysilicon companies all have the capacity to produce n-type products.
TW Solar stated at its 2022 semi-annual report briefing that the company has already started bulk shipments of n-type polysilicon and can fully meet the production of n-type materials according to customer needs in the future.
TBEA stated on its investor interaction platform that the company has the ability to produce n-type polysilicon, and the supply of n-type polysilicon accounted for about 20% in 2021. If market demand increases in the future, the Xinjiang production line only needs to make technical adjustments to increase the proportion of n-type polysilicon.
Daqo New Energy recently stated during an institutional research interview that its Inner Mongolia production line can produce n-type silicon materials 100%, and the Xinjiang production line, without technical modifications, can produce n-type silicon materials with a yield of 60%-70%.
