Currently, China's polysilicon industry boasts a large-scale production capacity that continues to expand. According to data, by the end of 2023, China's polysilicon production capacity had reached approximately 2.3 million metric tons. Looking ahead to 2024, an additional 1.18 million metric tons of capacity is expected to come online, pushing China's total polysilicon capacity beyond 3.7 million metric tons. This trend is not only significant within China but also globally, with China being the main driver of capacity growth. Such a massive release of capacity lays a solid foundation for the supply side of the polysilicon market, ensuring an abundant supply.
However, the market demand is growing at a slower pace. This is particularly evident during the traditional low season from late 2024 to February 2025, when demand is expected to be especially weak. Facing this situation, capacity utilization rates may decline. To address insufficient demand and prevent excessive inventory build-up, companies may take measures such as reducing production or halting operations. For instance, smaller polysilicon companies, under pressure from high costs and fierce competition, may lower their operating rates or suspend production during the off-season to ease financial pressure.
During the period from late 2024 to February 2025, downstream demand, such as PV installations, is expected to experience a seasonal slowdown. This is primarily due to winter weather conditions that are unfavorable for the construction and installation of PV projects. Additionally, some companies and projects may choose to conduct financial settlements and strategic planning at the end of the year, resulting in fewer new project starts. These factors contribute to a noticeable reduction in downstream demand for polysilicon, leading to a sluggish market.
Overall, the polysilicon market in 2024 is expected to remain in surplus, with inventory continuing to accumulate. As of May 2024, polysilicon stockpiles had approached 300,000 metric tons. While production levels may rise during the peak season due to increased demand, the market still shows signs of inventory build-up. However, compared to the first half of the year, the rate of inventory accumulation is expected to decrease in the second half. Specifically, polysilicon supply in the second half of 2024 is projected to be around 890,000 metric tons, while demand is expected to be about 850,000 metric tons, leaving a gap between supply and demand.
From a long-term perspective, the growth potential for polysilicon market demand remains strong. As global demand for clean energy continues to rise, the outlook for the PV industry is widely positive, which will provide sustained demand growth for the polysilicon market. However, in the short term, due to the impact of the off-season, demand growth is unlikely to fully materialize, and a "weak supply and demand" situation is unavoidable.
It is projected that by 2025, global PV installation demand will reach 550 GW, translating into a polysilicon demand of 1.9 million metric tons. However, polysilicon production capacity is also expanding rapidly. In particular, China’s capacity is expected to exceed 3.5 million metric tons by 2025. With additional overseas supply, total capacity will far exceed market demand. This situation will be more pronounced during the traditional off-season from late 2024 to February 2025.
Overall, the polysilicon market continues to face supply exceeding demand pressure. Currently, prices have already fallen below the full cost line for most manufacturers, and some older production facilities have seen their cash cost lines breached. As a result, several manufacturers have opted to suspend production for maintenance. Meanwhile, leading polysilicon companies continue to increase their market share, and new production lines are rapidly scaling up. However, during the off-season, companies' enthusiasm for production may be affected, and the release of new capacity may slow. This is partly due to companies adjusting production plans based on market demand to avoid overproduction and partly due to winter weather conditions that could negatively affect production equipment operations and maintenance.
Furthermore, with a background of prior overcapacity, polysilicon companies have accumulated considerable inventory. As demand decreases during the off-season, the rate of inventory reduction will slow, adding pressure to companies. In response, companies may adopt price-cutting strategies to reduce inventory, although the actual impact may be limited.
During the traditional off-season, both supply and demand in the market tend to be weak. Companies are likely to take a wait-and-see approach regarding prices, while downstream ingot pulling factories may have low purchasing demand, resulting in a lack of upward momentum for polysilicon prices. To reduce inventory and generate cash flow, companies may lower prices to some extent. As a result, polysilicon prices are expected to show a slight weakening trend from late 2024 to February 2025. While prices may decrease, the decline is not expected to be significant as companies will need to strike a balance between costs and profits.
Reviewing 2024, the polysilicon market experienced significant price fluctuations, with current prices remaining at low levels. During the off-season from the end of the year to February of the following year, apart from a wave of concentrated stockpiling by downstream ingot pulling factories, the overall market is relatively quiet. Polysilicon prices face the risk of further decline, and the market may already be in a surplus state in 2023. Silicon wafer production is expected to peak in October of this year.
Looking ahead, from 2024 to 2025, as production capacity is gradually phased out, the growth rate of output will slow significantly. The future price trend of polysilicon is expected to be directly related to capacity reduction and corporate competitive strategies. Overall, prices are projected to range between RMB 38 to 45 per kilogram, providing some profit margins for mainstream companies, though they will need to contend with potentially rising industrial electricity prices.
Polysilicon inventories remain at a high level, and market demand is weak. Looking ahead, although short-term optimism and production cuts may provide some support for price increases, the alleviation of inventory pressure will depend on substantial improvements in demand. Whether the price increase trend can pass smoothly through the industry chain remains to be seen.
As the market remains relatively quiet, with low transaction activity and companies adopting a wait-and-see attitude, polysilicon prices are likely to fluctuate within a narrow range. Even if individual companies adjust their prices, it is unlikely to trigger large-scale market reactions, leading to relatively stable price movements.
In the first half of 2024, polysilicon prices saw slight increases due to stockpiling, rising electricity prices, and companies supporting the market. However, after stabilizing in March, prices fell sharply, dropping below the cost line for all companies. Although stockpiling in early June helped support prices temporarily, they soon fell again, though the decline was limited.
For the second half of 2024, the overall polysilicon price trend is expected to be "up first, then down." Before the year-end stockpiling surge, polysilicon prices may have bottomed out, and there is a possibility of a price increase later. However, after the year-end demand surge ends, prices may decline continuously, potentially dropping below the previous price floor around the Lunar New Year.
As we move into 2025, with both supply and demand appearing weak, polysilicon prices are likely to continue a downward trend. In the long term, the price trajectory of polysilicon will depend on changes in the supply-demand balance. If demand in the PV industry grows faster than production capacity expansion, the market balance will improve, leading to potential price increases. Conversely, if overcapacity issues persist and competition remains fierce, prices may continue to stay low or even decline further.
Source：https://mp.weixin.qq.com/s/ZmiFOIApuLP68onHpJ_NKQ