China's Polysilicon Pricing Hits 11-Year High Amid High Demand and Power Curtailment

published: 2022-07-05 9:30 | editor: | category: News

Polysilicon is one of the key materials used in solar cells but, according to the Silicon Industry of China Nonferrous Metals Industry Association, the average cost of the highest-grade polysilicon has climbed for 20 consecutive weeks, reaching US$40.62 per kilogram on June 22nd, the highest point since 2011.

With increasing demand, polysilicon prices have been moving up since 2011. The Silicon Industry of China Nonferrous Metals Industry Association pointed out that prices have continued to rise due to limited supply and some manufacturers being affected by power curtailments.

China's demand for solar energy continues to increase. From January to May, China has added 23.71 GW of solar installations, an increase of 139.3% over the same period last year. On the other hand, China is also forms an important global polysilicon supply chain. Currently, Europe is trying to reduce its demand for Russian natural gas. Since May of this year, China's exports of solar cells and modules to Europe have increased by 127% compared with last year.

Rising polysilicon prices naturally pushes up the cost of solar panels, squeezing the profits of manufacturers and developers. Many rooftop solar projects in China have also been postponed or cancelled but prices are expected to improve in the future. BloombergNEF solar analyst Jenny Chase believes that more polysilicon capacity will come online in the fourth quarter of this year and prices have a chance to drop.

Xinjiang currently accounts for 45% of the world's existing polysilicon production. However, due to Uyghur human rights issues, the United States and other countries began banning products from the region in 2021. At present, China has also begun to expand polysilicon production capacity and new production capacity is not limited to Xinjiang.

Chinese polysilicon producers have announced plans for expansion in 2022 and 2023 and China's total polysilicon production capacity is estimated to reach 2.25 million tons by the end of 2023, compared with 520,000 tons at the beginning of this year. However, some experts have warned that the rapid expansion of production capacity may also lead to oversupply and squeeze the profit margins of manufacturers.


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