China’s silicon wafer production likely to recover in November after drastic decline in October, but could potentially fall again in December amid inventory pressure and poor end-user demand

SMM reports China's actual silicon wafer production in October was 50.06GW, a 'temporary' steep drop for the month. It saw a significant 18.8% dip MoM and fell about 23% short of the October forecast.

China's significant drop in silicon wafer production in October was mainly due to several solar cell factories cutting or pausing procurement before the National Day holiday. Facing falling PV module prices and rising silicon wafer costs, these factories pressured upstream suppliers, leading to a spike in silicon wafer inventory, peaking around 20GW. Doubtful about future prospects and learning from past market trends, producers significantly cut production. Some firms' operation rates fell from a planned 80-90% to roughly 60%, resulting in a serious reduction in silicon wafer output.

Consequently, silicon wafer prices have also plummeted, currently down by over 20% MoM.

SMM predicts a certain recovery in silicon wafer production in November, with output forecasted to reach around 58GW. This rise is due to two factors: the October production cut and continued price decline have boosted solar cell factories' purchasing enthusiasm, significantly reducing silicon wafer stock. Additionally, several projects set to start in November may cause a short-term shortage of 210 silicon wafers and solar cells, positively affecting silicon wafer production. Consequently, silicon wafer prices have found some support and have recently stabilized.

However, it's crucial to note that end-user demand has persistently lagged behind upstream supply. The November project launches are a temporary year-end phenomenon. Global PV module inventory still exceeds 100GW. With end-user projects winding down in December, silicon wafer production may significantly drop again, possibly to around 50GW. Moreover, due to the continued decline in polysilicon prices, silicon wafer prices may also decrease again.