In August, are polysilicon enterprises reducing production again? Will polysilicon prices continue to rise? [SMM Analysis]

In August, the polysilicon market encountered another upheaval!

At the beginning of August, due to the news of multiple base shutdowns for maintenance by top-tier polysilicon enterprises in Xinjiang, the expected polysilicon output dropped to around 139,000 mt.

By mid-August, polysilicon prices began to stir. With transactions gradually unfolding, a large procurement by a top-tier crystal pulling factory, traders entering the market, and continuous price increases by top-tier polysilicon factories, the transaction prices of polysilicon saw a slight stepwise increase, eventually stabilizing at 40 yuan/kg.

This week (8.19-8.23), after SMM scheduled production review, the actual polysilicon output in August significantly declined from expectations, with multiple manufacturers collectively reducing production again. The actual polysilicon output is expected to drop to 131,000 mt.

According to SMM, a second-tier enterprise with five workshops only had two and a half in operation, with the second phase entering a shutdown state. The actual output in August is expected to be less than 7,000 mt, with the operating rate dropping to about 60%.

Meanwhile, a top-tier enterprise in Xinjiang, which was expected to slightly increase production after resuming in August, bringing an additional 1,500-2,000 mt, is now expected to delay resumption until September. Another polysilicon enterprise with a capacity of 50,000 mt also announced a shutdown, with resumption tentatively scheduled for October.

What will be the impact of multiple polysilicon manufacturers collectively reducing production?

According to SMM, due to the operating fluctuations of top-tier PV wafer enterprises, the total scheduled production of domestic PV wafer enterprises in August is expected to be 55.07 GW, translating to a polysilicon demand of about 124,000 mt. In August, the polysilicon supply and demand are basically in a tight balance, which has actually provided some support for polysilicon prices.

Additionally, it is worth noting that, according to SMM, except for a few top-tier enterprises, many crystal pulling factories do not have ample polysilicon inventory. Some manufacturers' raw material inventory can only support them until mid-September, which will undoubtedly result in a loss of bargaining power in the upcoming September polysilicon price negotiations. Coupled with the upcoming small peak season in September-October, considering the current delivery price of 39-40 yuan/kg, there is still room for a slight increase in polysilicon prices. However, considering the weakening PV wafer prices and cost pressures, this room may be very limited, and the slight price increase may be reflected in the latter part of the September orders.