Domestic Polysilicon Supply Exceeds 100,000 mt in Jan on High Profits and Price Rally

SHANGHAI, Feb 7 (SMM) - The output of polysilicon stood at around 102,800 mt in January, up roughly 4.58% on the month, according to SMM statistics. The steady growth of polysilicon output amid slow increase of downstream demand left the polysilicon supply in a constant surplus.

According to SMM, the average monthly price of domestic dense polysilicon in January was 163 yuan/kg, and assuming the cost at 60 yuan/kg, polysilicon companies could enjoy a profit of at least 100 yuan/kg. Stimulated by the high profits, polysilicon companies, especially second- and third-tier ones, were keen on production while ramping up new capacity.

In addition, polysilicon prices rebounded in mid-to-late January, further boosting the enthusiasm of enterprises for production.

The overall growth of polysilicon supply was slightly affected by the routine maintenance undertaken by some enterprises in north-west China. Nevertheless, the supply of polysilicon was on the rise, which also led to persisting growth of finished product inventories of polysilicon enterprises.

According to SMM statistics, the total domestic production of silicon wafers in January was about 32.1 GW, which was equivalent to polysilicon consumption of about 86,700 mt. The less-than-output consumption caused polysilicon to remain in excess.

At the same time, many polysilicon companies started to hold back from selling when the polysilicon prices bottomed out in mid-January. As a result, their in-plant polysilicon stocks further accumulated.

It is learned that the polysilicon stocks of some leading companies have exceeded 30,000 mt, and the overall stocks of the industry have outnumbered 100,000 mt. In addition to the high inventory, the uneven distribution of inventory among enterprises also poses potential risks for future prices.

In this context, SMM believes that although the reluctance to sell among sellers promotes the polysilicon prices to rally, the overall supply surplus has not changed. Moreover, with the end of the first quarter approaching, some listed companies, who are to accept performance assessments, will face mounting pressure to make shipments. The short-term polysilicon prices seem to strengthen, but are likely to weaken in March.

In terms of the polysilicon supply, SMM expects that it will rise further in February considering the high profits and release of new capacity. The output is estimated at around 105,000 mt.