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Silicon China: Prices Rise Slightly for Upside Polysilicon Orders as There Is Little Additional Supply

published: 2022-08-12 9:30

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 August 10. This update pertains to prices in China during this week (i.e., the week of August 8). Transaction prices of monocrystalline refeeding material have been staying within RMB 300,000-308,000 per metric ton with the average rising by 0.66% from the previous week to RMB 304,200 per metric ton. Transaction prices of monocrystalline dense material have been staying within RMB 298,000-306,000 per metric ton, with the average rising by 0.73% from the previous week to RMB 302,200 per metric ton. On the whole, domestic prices of polysilicon materials have elevated slightly this week. Prices of monocrystalline refeeding material, monocrystalline dense material, and monocrystalline cauliflower material has all registered a hike that is within 1%.

The August orders under the LTA framework were mostly completed in the previous week. Therefore, transactions that have taken place this week mainly involve upside orders with small procurement quantities, though a few are still related to LTAs. The mainstream price range is RMB 305,000-308,000 per metric tons. Polysilicon suppliers continue to commit almost all of their production capacity to meeting the demand related to LTAs. There is little to no additional supply available. Hence, the Chinese polysilicon market remains in shortage.

Polysilicon prices continue to trend slightly upward this week. The August orders under the LTA framework were mostly completed in the previous week, and some of them have been extended to include shipments to the middle of September. As a result, Chinese polysilicon suppliers are actually seeing a negative inventory balance. At the same time, capacity utilization rates remain very high in the downstream sections of the supply chain, so demand continues to outpace supply for polysilicon. Also, five Chinese suppliers will be releasing new production capacity in August. This is expected to offset the effect of the facility maintenance works conducted by the other five Chinese suppliers. However, this additional production capacity is not expected to be sufficient to meet the growing demand. In fact, polysilicon buyers have raised procurement quantity because they believe the undersupply situation will continue. This, in turn, is reinforcing the existing supply-demand dynamics.

As of this week, there are 14 operating Chinese polysilicon suppliers, of which five are conducting facility maintenance works. One of these five is gradually getting some of its production lines back to normal operation, and it will again contribute to the domestic output in the middle or late August. Because of the current supply-demand dynamics and the overbooking situation experienced by suppliers, polysilicon prices in China will keep creeping up through August.

Looking ahead to September, Chinese suppliers will mostly have finished with their facility maintenance works, so around 5,000 metric tons of domestic production capacity will be restored. Furthermore, a significant amount of new production capacity will be released by suppliers including Leshan GCL New Energy Technology, Baotou Xinte, Baotou Tongwei, Yunnan Tongwei High-Purity Crystalline Silicon, Inner Mongolia Dongli, and Qinghai Lihao Semiconductor Material. Around 8,000 metric tons of domestic production capacity will be added. The month-to-month growth rate of the domestic polysilicon production in September is projected around 20%. The monthly total should be sufficient to meet 30GW of demand from the wafer section of the supply chain.

In terms of demand, PV wafer suppliers have raised their capacity utilization rates due to high profit and polysilicon supply growth. Also, PV cell suppliers had stocked up further on wafers just before cell demand started to weaken. With high capacity utilization rates and stock-up activities downstream, wafer suppliers can still provide plenty of polysilicon demand. Therefore, polysilicon prices will maintain their current trajectory to the end of September, when negotiations begin for the October orders. The Chinese polysilicon market will not reach an inflection point with respect to the supply-demand dynamics until the influence of weakening demand gradually spread from the downstream to the upstream, thus causing a drop in capacity utilization rates.

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