Silicon China, a branch of China Nonferrous Metal Industry Association, released its latest report on the price trends of polysilicon materials used in the manufacturing of PV products on June 1. This update pertains to prices in China during this week (i.e., the week of May 30). Transaction prices of monocrystalline refeeding material are within RMB 263,000-270,000 per metric ton, with the average residing at RMB 266,300 per metric ton and showing an increase of 1.99% from the previous week. Transaction prices of monocrystalline dense materials are within RMB 261,000-268,000 per metric ton, with the average residing at RMB 264,100 per metric ton and showing an increase of 2.09% from the previous week.
Prices have again been trading upward in the Chinese polysilicon market this week. The average transaction prices of monocrystalline refeeding material, monocrystalline dense material, and monocrystalline cauliflower material all registered an increase of around 2% from the previous week. Regarding monthly orders in the Chinese polysilicon market, about 50% of the orders for June have been finalized. The remaining orders that have yet to be finalized include those that were supposed to be arrange earlier but cannot be processed so far. The execution of these delayed orders will probably be postponed to the middle of June. There are also orders related to some long-term agreements (LTAs) that are still being negotiated. They are expected to be finalize within this week. Currently, the overall production capacity of Chinese polysilicon suppliers is fully booked.
Looking at the fluctuations of prices under LTAs this week, monocrystalline refeeding material has been mainly traded within RMB 263,000-268,000 per metric ton. However, prices of monocrystalline refeeding material have also reached highs of RMB 268,000-270,000 per metric ton. For upside orders that are small in quantity and urgent, prices have risen above RMB 270,000 per metric ton. Buyers have actually been offering higher prices during negotiations in order to complete transactions and secure sufficient supply.
As previously forecasted, the general price trend has returned to upswing this week as the market remains in undersupply. Wafer suppliers, whether they have undertaken expansions or not, have been operating at fully-loaded or nearly fully-loaded capacity because they are seeing high profit margins for their products. Likewise, polysilicon suppliers have been keeping their capacity utilization at a high level and gradually activating new production capacity. However, demand continues to outstrip supply. Some buyers already arranged orders for June ahead of time in May. With polysilicon production capacity on the whole being fully booked, some orders under LTAs have been pushed back slightly as well. This situation is reinforcing the view of extremely tight supply and encouraging buyers to offer higher prices in order to maintain a safe level of inventory.
China’s polysilicon supply for June is currently estimated around 70,000 metric tons. This figure covers the quantities provided by domestic suppliers and imported from abroad. It also translates to an increase of about 4% from the previous month. Domestic suppliers that are activating new production capacity and thereby driving the growth include Xinte and Asia Silicon. However, domestic suppliers are experiencing some delays in their respective capacity expansion schedules. Therefore, the growth of domestic production capacity in June is going to be smaller than previously anticipated. Looking at importers, OCI’s plant in Malaysia has resumed operation following its maintenance, but it has yet to fully ramp up. Also, shipments from Germany’s Wacker Chemie are still being hampered by logistical issues. Therefore, the quantity of imported polysilicon will stay rather low in June.
Turning to the demand side, wafer suppliers including Gaojing and Shuangliang have been raising production capacity when conditions are favorable. Therefore, their demand for polysilicon has been climbing as well. However, demand so far has significantly exceeded supply, so the availability of polysilicon now dictates the output from Chinese wafer suppliers. According to data from China’s National Energy Administration, China’s grid-connected PV generation capacity will increase by 108GW for 2022. This amount translates to an annual growth rate of 96%. Also a relatively neutral forecast puts the growth of installed PV generation capacity worldwide at 250GW for 2022. Using this figure as a reference for calculation, the matching global polysilicon demand is estimated to reach around 910,000 metric tons.
Based on the expansion plans of domestic polysilicon suppliers (e.g., GCL-Poly, Xinte, Yongxiang, and Asia Silicon), China’s polysilicon production is projected to total around 780,000 metric tons for 2022. China’s polysilicon supply for the same year is projected to come to around 880,000 metric tons. On the whole, demand will fall slightly behind supply. This situation is not expected to be resolved until corrections are made to the profit margins of wafers, so polysilicon prices will maintain their uptrend in the short term.