Polysilicon prices steady, market worries persist about worst-case scenario

June 21, 2024 OFFICE

The Global Polysilicon Benchmark (GPM), the OPIS benchmark for polysilicon outside China, was valued at $22,567/kg this week, unchanged from last week based on heard buy-sell indications. The price has remained stable for four consecutive weeks.

According to a source with knowledge of the polysilicon market outside of China, the trading status of global polysilicon in the spot markets is currently largely stagnant, with buyers awaiting the preliminary ruling from the US anti-dumping and countervailing duty investigations expected in July .

A major global buyer of polysilicon reported receiving spot prices from several vendors lower than long-term agreement prices for the same specifications. However, due to uncertainty in US trade policy, they have refrained from placing an order.

This information was confirmed by a global supplier of polysilicon, which expressed concern: «We are concerned about the accumulation of inventory.»

However, there are still optimistic voices persisting in the market, with sources reporting positive sales experiences going forward. One of the sources explained that the solar supply chain contains three distinct supply-demand relationships: between polysilicon and wafers, wafers and cells, and cells and modules.

«It has been argued that the application of the current pessimism from the module market to the global polysilicon market is unwarranted,» the source added. «Only the relationship between polysilicon and wafers directly affects the global polysilicon price, which has proven to be stable with no noticeable fluctuations.»

China Mono grade, OPIS’s estimate of domestic polysilicon prices, remained steady at CNY 33 ($4.54)/kg this week, marking the fourth consecutive week of stability.

Market participants generally believe that current polysilicon prices do not need further reduction, as it would not significantly stimulate sales. Wafer companies are constrained by their operating rates and cash flow, limiting their ability to accelerate polysilicon procurement. «Currently we are facing a loss of about 0.20 yuan for each wafer produced,» revealed a major wafer manufacturer.

Multiple sources have confirmed that while nearly all Chinese polysilicon producers are undergoing equipment maintenance, production cutbacks or shutdowns, one major producer is operating at full capacity with a 100% operating rate.

As a result, this company is incurring a monthly loss of CNY 600-700 million in the polysilicon production segment, a source commented, noting that due to the plant’s large production capacity, operating at full capacity will keep overall polysilicon inventory levels high, causing uncertainty. on the outlook for polysilicon prices.

Sources say that in addition to operating at full capacity, the company’s new production capacity is also ramping up as planned. This strategy underscores the company’s strong cash flow and its intent to leverage scaled capacity and cost advantages to squeeze the survival space of smaller companies in the ongoing price war.

According to an industry observer, the current situation of selling polysilicon at a significant cash loss is unsustainable. By the end of the year, prices are expected to stabilize slightly above the average cost of money in the market, noted the source, who further predicts that at that point, some excess production capacity, particularly high-cost or aging facilities, are likely to have been effectively removed.

OPIS, a Dow Jones Company, provides energy prices, news, data and analysis on gasoline, diesel, jet fuel, LPG/NGL, coal, metals and chemicals, as well as renewable fuels and environmental commodities. It acquired price data assets from the Singapore Solar Exchange in 2022 and now publishes the OPIS APAC Solar Weekly Report.