SHANGHAI, Jan 16 (SMM) - On January 16, the domestic polysilicon prices that had been falling for nearly 45 trading days, saw a sudden pivot. The prices of dense polysilicon rose sharply from the previous 120-140 yuan/kg to 160-170 yuan/kg as of press time. In the volatile PV market, the quotations of silicon wafers and solar cells were raised, while the module prices were stable due to its thin transactions and slower decline earlier. What are the reasons behind the sudden surge in polysilicon prices?

SMM believes that the immediate cause was the tough attitudes of leading polysilicon enterprises in holding their prices firm when the prices slumped lower than the acceptable level. Since the first three leading enterprises to resist the exceedingly low prices contributed to nearly 50% of the market supply, the change in supply-demand structure naturally pushed up polysilicon prices.

In addition, the raw material inventory of silicon wafer companies was generally low as a result of the previous rapid decline in polysilicon prices and their cautious procurement on the approaching Chinese New Year holiday. Therefore, when the silicon wafer prices improved with the production ramp-up of module and solar cell producers, the finished product inventory of silicon wafer companies dropped to low levels with consistent consumption. As a result, silicon wafer enterprises will face greater production pressure after the holiday, which weakens their bargaining power and also boosts the confidence of polysilicon enterprises to hold their offers firm.

As for the price forecast, SMM believes that the surge in polysilicon prices will definitely improve the sluggish trades in the polysilicon market. Considering the pricing power that top-tier polysilicon companies have won back, together with the possible upsurge in post-holiday stocking demand, the previous market forecast of 100 yuan/kg for polysilicon price in February will be unlikely to materialise. However, the inventory pressure of polysilicon companies shall also be taken into account. According to SMM statistics, the total polysilicon inventory in the domestic market has reached about 82,000 mt. How to consume such a large amount of inventory and whether leading silicon wafer companies will cooperate to bargain down prices will become the crucial factors to the polysilicon prices in the first quarter of 2023.