Ripple Effect of the Unexpected Polysilicon Production Cut Sends Polysilicon Prices Higher

SHANGHAI, Jun 30 (SMM) - After the unexpected shutdown of a polysilicon plant in Xinjiang, the market is still shadowed by the incident. Polysilicon prices continued to rise this week after a weekly gain of nearly 3% last week amid supply and demand imbalance. Taking monocrystal recharging polysilicon as an example, the prices rose above 290 yuan/kg with an increase of nearly 2.47% compared with a week ago.

SMM mainly attribute the palpable price hike to the following reasons:

1. Production cuts in Xinjiang are still expanding, and a large enterprise was completely shut down for overhaul. The unplanned production cuts have not only led to a reduction in polysilicon supply, with the June polysilicon output estimated at 61,000 mt, down 4.2% MoM, but also disrupted the supply of some long-term orders. Hence downstream silicon wafer companies had to source from the spot market, underpinning the spot prices to some extent.

2. Some of the projects expected to commission in July have been postponed, involving a total capacity of around 60,000 mt/year. The delayed commissioning has intensified the market sentiment to some extent, pulling up the prices.

3. Many polysilicon enterprises have maintained full production amid robust market demand in the second quarter, and thus plan to overhaul in July and August in order to ensure safety production. As such, the market is quite bullish over the market prospect, and the manufacturers are firm to the prices concerning the new monthly orders.

4. Silicon wafer prices have also posted palpably gains after staying quiet for quite some time following the constant increase in polysilicon prices. It is expected that the prices of solar cell and module will rise as well. Rising downstream products prices have raised the acceptance level of downstream buyers for polysilicon.

Looking ahead, SMM believes that the supply tightness of polysilicon is likely to intensify in July and August after leading manufacturers enter maintenance. Therefore, polysilicon prices are expected to rise further, followed by silicon wafer, solar cell and module amid cost pressure, with power station being the last one on the industry chain.