According to pv international magazine.
Several major Chinese silicon makers have cut production, raising fears of near-term upward pressure on polysilicon prices.
On the one hand, Tongwei and Daqo have confirmed their intention to carry out technical upgrades and maintenance work at their polysilicon factories, which will result in a step-by-step and gradual reduction in production. At the same time, Hong Kong-listed GCL-Poly told Chinese media that it would enter a phase of maintenance and production reduction.
The combined capacity of these three companies represents more than half of the world's silicon supply, and their adjustments are expected to have significant impacts on the photovoltaic energy supply chain.
Tongwei justified this decision by the dry season which rages in the southwest of China and which has pushed up electricity prices. Given the low silicon prices, the company decided to temporarily reduce production. Its subsidiary Yongxiang will implement reductions at six polysilicon factories in Sichuan, Yunnan and Inner Mongolia – representing, in total, a capacity of more than 900,000 tonnes per year.
Daqo New Energy for its part cited a persistent imbalance between supply and demand in the polysilicon market, which led to worsening losses for the industry. The company said it plans to gradually reduce production and carry out maintenance work on its production lines in Xinjiang and Inner Mongolia. Daqo currently operates an annual polysilicon production capacity of approximately 305,000 tonnes, mainly concentrated in these regions of China.
GCL-Polyalthough less specific, expressed support for the self-regulation initiative of the China Photovoltaic Industry Association (CPIA). The manufacturer has promised to communicate its production changes through official announcements. By the end of 2024, GCL-Poly had said it estimated its silicon production capacity would reach 480,000 tonnes, with deliveries totaling 207,000 tonnes in the first three quarters.
Silicon prices fell below cost levels in May 2024, leading to heavy losses for major producers. Tongwei, Daqo and GCL-Poly reported combined net losses of CNY 4 billion, CNY 1.1 billion and CNY 3 billion, respectively, for the first three quarters of 2024. Analysts say production cuts are a collective measure aimed at stabilizing prices.
Following these announcements, Chinese silicon futures surged on December 26, with all contracts hitting the daily trading limit. Prices of the seven contracts rose 13.99%, closing at CNY44,000 per tonne.
Data from the China Nonferrous Metals Industry Association (CNMIA) Polysilicon Branch showed a modest increase in polysilicon transaction prices this week, with increases of 0.74% to 2.7% across major product categories.
Translated by Marie Beyer.
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