Polysilicon prices poised for further gains in 3Q

Market: Metals
26/07/22

Silicon solar wafer and cell producers are raising their prices, with polysilicon trading at 10-year highs and supply set to tighten further in the third quarter amid increased maintenance work in China.

Chinese solar wafer and module developer LONGi raised its prices for wafers today. The company has lifted the price for its 182/247mm P type M10 wafers to 7.54 Chinese yuan ($0.992) from Yn7.30 on 30 June, with prices for its 166/223mm P type M6 wafers climbing to Yn6.33 from Yn6.08 and P type 158.75/223mm wafers moving up to Yn6.13 from Yn5.88.

LONGi's price increases follow Chinese polysilicon and solar cell producer Tongwei raising its prices on 25 July for the second time this month. Tongwei lifted its price for 182 type monocrystalline cells to Yn1.30, from Yn1.26 on 1 July and Yn1.20 on 17 June. The price for 166 type cells rose to Yn1.28 from Yn1.24 on 1 July and Yn1.17 on 17 June, while 210 type cells rose to parity with 166 type at Yn1.28, from Yn1.23 on 1 July and Yn1.18 on 17 June.

South Korea-based polysilicon producer OCI today said maintenance at Chinese polysilicon producers in China following an accident at a plant in Xinjiang in June could exacerbate an ongoing supply shortage. "Although new poly-Si expansion volumes in China are gradually being reflected in the market, the poly-Si price continues to be strong as the supply is still insufficient to address the demand for wafers and downstream," the company said in its second-quarter results presentation.

OCI's own production of solar-grade polysilicon was about 30pc below its full capacity in the second quarter as the company carried out unplanned maintenance at its plant in Malaysia. The maintenance was completed at the end of June and the plant has raised its capacity by 5,000 t/yr to 35,000 t/yr following a debottlenecking procedure to increase efficiency.

Even with the drop in output, OCI reported a 17.3pc year-on-year increase in its second-quarter sales, to 387bn South Korean won ($295.6mn), as polysilicon prices climbed. Chinese polysilicon producers Daqo New Energy and GCL Technology have given preliminary guidance indicating their second-quarter profits soared by 335.03-344.28pc and 187.5pc, respectively, owing to the sharp increase in prices. The companies will release their full results in August.

OCI noted that prices for raw material silicon metal stabilised during the quarter, reducing manufacturing costs.

OCI said rising raw material costs could reduce the rapidly growing demand for renewable generation. Imports of solar modules from China to Europe accounted for 33GW of the total 63GW exported in the January-May period, climbing by 140pc year on year, prompted by the energy crisis. At the same time, demand in China is rising as the 14th Economic Development Reform for Renewable Energy for 2021-25 requires local governments to use 33pc renewable energy as a share of total power generation. China installed 31GW of solar capacity during the first half, up from 140pc year on year, and is expected to install 100GW by the end of the year.

In April, OCI signed a $1.2bn deal with South Korean solar products manufacturer Hanwha Solutions for the long-term supply of polysilicon from July 2024-June 2034. This is equivalent to about 45pc of OCI's annual sales in 2021. Solar manufacturers have been moving to secure long-term polysilicon supply as demand is expected to continue outpacing supply.

China's polysilicon production increased by 53.5pc in the first half of this year to about 365,000t, according to China's Ministry of Industry and Information Technology (MIIT). Silicon wafer production rose by 45.5pc to 152.8GW and crystalline silicon module output climbed by 54.1pc to 123.6GW. But exports of modules grew faster, jumping by 74.3pc to 78.6GW, and the total value of solar photovoltaic products soared by 113.1pc to $25.9bn.

Polysilicon prices in China reached an average price of Yn273,100/t at the end of June, their highest level since 2011, after rising for 20 consecutive weeks, according to the Silicon Industry Branch of the China Nonferrous Metals Industry Association (CNIA). The average price has since moved to above Yn300,000/t. Since the beginning of 2021, the mismatch between supply and an expansion in downstream wafer capacity has lifted prices from an average of Yn80,000/t and CNIA expects strong demand to continue to drive prices higher.

By Nicole Willing

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