Demand for polysilicon remains strong in January, with prices continuing to rise
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In January, the domestic silicon market continued to show an upward trend, with prices rising further; both domestically produced silicon and imported silicon saw increases to varying degrees. According to data from Business Society, the price of polysilicon increased by 5.25% in January. The main reason is that as the operating rates of silicon material manufacturers return to normal, production volumes have basically reached their limits. However, downstream silicon material producers are increasing their purchases, and at the same time, there is a surge in the production capacity of silicon wafers. As a result of these factors, the price of polysilicon continues to rise. As of January 29, according to Biznews’ monitoring, the current prevailing domestic trading price for polysilicon of grade 1 – used in solar applications – is between 57,000 and 60,000 yuan per ton. The price of polysilicon outside China, including taxes, ranges from 66,000 to 70,000 yuan per ton. Since mid-December 2020, polysilicon has managed to escape its downward trend and its prices have started to rise. Entering 2021, the market atmosphere became even more positive; both the pricing for domestic manufacturers and that for imported goods saw significant increases. The increase was particularly pronounced for monocrystalline silicon. Although polysilicon did not see as large an increase as monocrystalline silicon, the ongoing upward trend kept the market in a state of strong supply and demand. The entire silicon material industry experienced a period of growth ahead of the Spring Festival. Firstly, looking at the supply side, domestic polysilicon manufacturers are currently operating at high levels of capacity. Throughout January, all around 11 polysilicon production companies in China were functioning normally; in particular, plants in regions such as Sichuan, Ordos, and Inner Mongolia resumed operations, which increased the supply to the market. However, this high level of operation has not led to an accumulation of inventory. Companies are receiving good orders, with orders for January already finalized, and most manufacturers are now concluding orders for February.
The increased output from silicon material manufacturers is mainly driven by favorable demand from downstream sectors, and there are two key factors behind this: firstly, the concentrated deployment of production capacity by downstream silicon wafer manufacturers into the market has injected new vitality into it. Secondly, the centralized procurement activities ahead of the Spring Festival also increased the demand for silicon materials, with a noticeable rise in purchases by downstream users. Moreover, downstream manufacturers have also been accelerating the process of absorbing it recently. In particular, given the risk factors such as disruptions in transportation that could arise due to the pandemic in the future, downstream companies ordered goods in advance, which led to an increase in the supply of silicon materials. In the near term, it is expected that polysilicon will remain in a strong position before the New Year; enterprise operation rates are likely to stay high, with few maintenance plans on the part of companies, resulting in a stable supply situation. Furthermore, driven by the increased purchasing of silicon wafers ahead of the festival, demand for polysilicon is likely to remain high. Coupled with the impact of the pandemic, there are certain risks related to transportation, which may result in polysilicon prices trending upward rather than downward before the festival. After the holiday, it is necessary to monitor the pace at which downstream silicon wafer manufacturers are using up their inventory. Currently, there is a risk of inventory buildup on the downstream side; if shipments slow down in the future, polysilicon prices may stop rising or even fall again.
On June 14, 2019, the price for importing polysilicon was 67,500 yuan per ton.
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