SMM Analysis of Drivers behind Rising Polysilicon Prices

SHANGHAI, Aug 10 (SMM) – Everbright Securities commented that the European market is the major battlefield of mainstream Chinese photovoltaic companies and also an area with strong profitability. As Europe is the main export destination of domestic photovoltaic companies, the huge potential of its local photovoltaic industry will drive the vigorous development of the domestic photovoltaic industry to a great extent. According to data released by Eurostat, 75% of the solar modules imported by the EU in 2020 came from China. According to data from the China Photovoltaic Industry Association, China's photovoltaic exports reached 78.6GW in the first half of this year, a year-on-year increase of 74.3%, indicating that overseas market demand continued to be strong.

According to the spot price of SMM, as a raw material for photovoltaic production, the price of polysilicon has been rising since 2021. Taking the price of polysilicon dense material as an example, its spot price kept going up in the first half of this year. As of August 9, its average spot price was 302.5 yuan/kg, an increase of 78.5 yuan/kg from 224 yuan/kg at the beginning of the year, an increase of 35.04%.

As for the reason for the rise in domestic polysilicon prices, SMM believes that it was mainly driven by the imbalance between market supply and demand. At present, there is a serious disconnect between the overall domestic polysilicon production capacity and the downstream demand. According to SMM statistics, as of the first half of 2022, the domestic silicon wafer production capacity was about 500GW, while the domestic polysilicon production capacity was about 840,000 mt (about 311GW), thus the polysilicon production capacity was seriously insufficient. Regarding the future market, SMM believes that from the perspective of the supply and demand balance of the overall global market, polysilicon will gradually reach a state of balance or even excess supply from 2022 to 2023, and will continue to maintain oversupply for a long time in the future. polysilicons prices will enter a downward channel by then.