SMM Analysis: Polysilicon production in July increased by 3.22% month-on-month. Is there still room for further price rise after recent rebound?

According to SMM statistics, domestic polysilicon output in July was about 125300 mt, up 3.22% from June. A against the backdrop of excessive supply of polysilicon, the supply of domestic polysilicon continued to grow. What are the reasons for this growth? Is there still room for the price of polysilicon to rise in the future market?

According to SMM's understanding, some of the production capacities of polysilicon to be commissioned were postponed due to domestic polysilicon price that fell below 60 yuan/kg in early July, which had a certain negative impact on the growth of polysilicon supply. For first-tier companies, there was still a certain profit margin, even atat low prices. The production of leading polysilicon companies did not decrease, and even rose due to the ramp-up of new capacity. Meanwhile, in the mid-late period of July, the price of polysilicon in China showed signs of "rebound" and downstream demand was positive, thus polysilicon inventory significantly decreased, and the production enthusiasm of second- and third-tier enterprises also increased, leading to an increase in polysilicon production.

Regarding the production schedule of polysilicon in August, SMM believes that the possibility of a sharp price drop in domestic polysilicon in August is low. Although some enterprises, represented by Shanghai Machine Tool Factory Co., Ltd and Baofeng Machinery Manufacturing Co., Ltd, have decided to delay the commissioning of new capacity, there is still a certain profit margin for the manufacturers. The enthusiasm for production will still be maintained. Meanwhile, some top-tier manufacturers are still in the ramp-up period in capacity. So, the supply of polysilicon is on the way to increasing. In August, the output is expected to exceed 130,000 mt.

SMM believes that there is upside room for the polysilicon price in the future, mainly because the sentiment for purchasing upstream raw materials in all sectors of photovoltaics is generally high, and the polysilicon consumption in silicon wafer sector in July and August will reach 132,000 mt and 136,000 mt respectively. Market demand will support polysilicon to rise slightly.In addition, at present, leading manufacturers are beginning to sell N-type solar cells with higher prices to the downstream buyers, and the downstream resistance is not obvious, which is also conducive to further price hikes in the upstream market.However, it should be noted that although polysilicon price may rise, the overall upward space will be limited. The main reason is that once the polysilicon prices rise too much, new players will rush into the market, making the market seriously oversupplied again and finally leading to a new round of price decline.