Silicon China, a branch of China Nonferrous Metal Industry Association, released its latest notice on the price trends of polysilicon materials used in the manufacturing of PV products on May 18. This update pertains to prices in China during this week (i.e., the week of May 16).
According to the notice, transaction prices of monocrystalline refeeding material are in the range of RMB 255,000-266,000 per metric ton, with the average residing at RMB 261,100 per metric ton. Transaction prices of monocrystalline dense materials are in the range of RMB 253,000-264,000 per metric ton, with the average residing at RMB 258,700 per metric ton. Generally speaking, Chinese polysilicon prices have been holding steady this week because most of the contracts for May were already finalized last week. This week, very few transactions have been arranged. Just one to two polysilicon suppliers have received some upside orders that involve fairly low quantities.
While prices have stabilized for now, supply remains tight. Chinese suppliers, whether they are long-established suppliers or new entrants, have been operationally impacted by the latest wave of COVID-19 outbreaks in their home country. While the degree of impact varies from supplier to supplier, the general momentum of their capacity expansions has decelerated. China is still taking on new polysilicon production capacity every month, but the pace of capacity growth still lags behind that of demand growth. This development is constraining wafer production capacity in the downstream. For instance, the capacity utilization rates of some wafer production sites in the country are fairly low due to the lack of polysilicon supply. Some top-tier wafer suppliers even have to limit their capacity utilization rates. In sum, tight supply continues to be an issue.
As mentioned earlier, prices have stabilized mainly because most of the contracts for May have been arranged. It is also worth noting that product delivery period has been extended to June for some transactions. Suppliers for the most part do not have enough stock on hand for new contracts. Moreover, the recent wave of rush orders with high prices has dissipated somewhat as wafer inventories of wafer and cell suppliers are not being consumed at the expected pace. Given the situations on the supply and demand sides, polysilicon prices are expected to stay mostly flat in the short term.
Regarding the latest statuses of polysilicon and wafer suppliers, they are operating normally this week. There are no reports of sudden production cuts. Polysilicon suppliers are carrying a very low level of inventory. They are also fully booked in terms of capacity utilization. Looking ahead, polysilicon prices will probably stay on a flat trend until the end of May or early June. At that time, suppliers and buyers will begin a new round of monthly contract negotiations. Regarding prices in June, they will be determined by the supply situation. The total supply in the Chinese polysilicon market in June is projected to reach about 73,000 metric tons, of which 66,000 metric tons will be domestically produced and 7,000 metric tons will be imported. The main supply contributors will include Xinte, Tongwei, and Asia Silicon as they are activating new production capacity. Sources of imported polysilicon will include OCI, whose plant in Malaysia will resume production following the completion of maintenance works. The total demand in the Chinese polysilicon market in June is projected to reach about 73,000 metric tons, showing an increase from May. Gaojing and Shuangliang will be the main demand contributors because they are activating new wafer production capacity.
With the supply-demand relationship now attaining a balance, polysilicon prices will be on a stable trend during the interim period. However, individual polysilicon buyers vary in terms of the ability to secure supply. Therefore, they could experience different degrees of tight supply. China Silicon expects polysilicon prices to continue creep up slightly before the end of June. Currently polysilicon suppliers do not have sufficient inventory, whereas wafer suppliers and cell suppliers are experiencing some “structural accumulation” with their wafer inventories. Nevertheless, inventory consumption on the whole is proceeding at the usual pace. China Silicon believes that there will be no significant shift in polysilicon prices until the downstream sections show notable changes in capacity utilization rates.