Since the second quarter of 2023, there has been a steady increase in polysilicon production capacity, leading to a rapid growth in industry inventory. This surplus capacity of silicon is expected to become even higher, resulting in a significant drop in its price as it approaches the break-even point. Recent price data reveals that the average price of dense polysilicon material has reached $64 per kg, with overseas silicon materials like Wacker and OCI also experiencing substantial decreases in price. Consequently, as dense polysilicon prices decline, the prices of the entire industry chain follow suit.
In regions such as China, Europe, and Australia, module prices have continued to fall, mirroring the downward trend in the industry. However, in the U.S. market, prices have remained relatively stable. Based on our estimates, the premium of the U.S. market, compared to the European market, has increased from $0.1 per watt to nearly $0.2 per watt.
The U.S. PV market continues to experience robust demand; however, disruptions in policies have resulted in a shortage of modules relative to the demand, thus keeping prices at high levels.
On the demand side, the U.S. has rejoined the Paris Agreement, and the IRA bill has been passed, indicating that the PV installed capacity is expected to grow in the U.S. market. In 2022, the import volume of U.S. solar modules was significantly affected by the U.S. UFLPA bill and Southeast Asia module anti-circumvention investigation. However, as the investigation results are published, the PV installed capacity is expected to rise once again.
On the supply side, local production capacity is expanding due to the stimulus provided by the IRA bill, but the pace of expansion remains slow. Import volumes continue to grow rapidly, but they are still subject to constraints imposed by multiple bills. While the IRA bill is expected to stimulate U.S. production capacity, initial capacity planning by manufacturers is conservative. Furthermore, there is uncertainty surrounding relevant policies, which may cause delays in expansion. On the import side, the U.S. has implemented the WRO and UFLPA, leading to strict reviews within the supply chain and highly uncertain review times. Currently, customs clearance still takes approximately 1.5 to 2.5 months.
In summary, the U.S. PV demand remains high in 2023, but module supply is limited, posing a challenge of shortage and resulting in the expectation of continued high prices.