SMM: Polysilicon Oversupply Continues in H1, Silicon Wafer Price to Bottom Out

At the CLNB 2024 (9th) China International New Energy Industry Expo - PV Power Generation System Supply Chain Forum, hosted by Shanghai Metals Market (SMM), SMM's Chief PV Analyst Shi Zhenwei provided an outlook on the polysilicon and silicon wafer markets.

► Recent Polysilicon Market Analysis:

May 2024: At the end of April and the beginning of May, market orders were influenced by cost pressures. The market share of mixed and low-quality materials increased. Mixed materials first fell below the 40 yuan mark, with prices dropping to 39 yuan/kg. In the later stages of order signing, some mixed materials prices fell to 35 yuan/kg.

Polysilicon Supply and Demand Review

► H1 Polysilicon Market Review:

• The overall polysilicon market remained in a state of oversupply, with inventories continuously accumulating. By May 2024, polysilicon inventories were approaching the 300,000 mt mark and were expected to continue accumulating in May and June.

• Polysilicon supply showed a MoM decrease, first reflected in May, mainly because prices had fallen below the full cost line for most manufacturers. The cash cost line for some smaller and older capacities was also breached, leading to production halts and maintenance by several manufacturers.

• Leading polysilicon manufacturers continued to increase their market share, with new production lines being commissioned and ramping up rapidly.

Polysilicon Capacity Expansion and Commissioning Timeline

Shi introduced the capacity expansion and commissioning timelines for several companies.

• Currently, apart from the top 5 manufacturers, other polysilicon producers are already operating at a loss on a cash cost basis.

Polysilicon Production and Price Outlook

► Production Forecast:

• May 2024 - August 2024: Polysilicon production schedules will continue to decrease, reaching the lowest point in August 2024, mainly due to the previous oversupply, cost pressures, and increasing maintenance.

• September 2024 - November 2024: After the previous inventory reduction, production schedules will gradually resume with the commissioning of new capacities. This period is also the traditional peak season, leading to increased demand and production schedules.

• December 2024 - January 2025: Production schedules will sharply decline due to the end of stockpiling and the impact of the Chinese New Year holiday at the end of January.

• February 2025 - April 2025: With new polysilicon projects coming online and demand recovering, production schedules will start to increase, but this will also lead to oversupply.

► Price Forecast:

• May 2024 - June 2024: SMM expects the average price in June to drop to 32 yuan/kg, with the lowest price for some N-type materials possibly falling below 30 yuan/kg.

• June 2024 - October 2024: The previous price drop below the cost line will lead to reduced polysilicon production, resulting in decreased inventories and a price rebound. However, SMM believes the rebound will have limited room.

• October 2024 - January 2025: After experiencing year-end fluctuations, polysilicon prices will decline again with the release of new capacities.

• January 2025 - April 2025: Post-holiday demand recovery will lead to a price increase.

► Silicon Wafer Market Analysis in May:

May 2025: Cost pressures on silicon wafers continue to increase, with current losses reaching about 0.3 yuan per wafer. Integrated manufacturers are increasing their dual distribution ratio—exchanging polysilicon for silicon wafers to save costs. The decline in silicon wafer prices has slowed, and SMM believes silicon wafers will bottom out.

China's Monthly Silicon Wafer Production Schedules (May & June 2024)

► SMM Comments:

• N-type: The N-type market is further expanding, expected to reach a 78% share by June.

• P-type: The P-type market is further shrinking, expected to drop to a 22% share by June.

• 182mm: Remains the absolute mainstream in the market.

• 210mm: The share remains relatively stable in May and June.

• 210R: The share has increased.

• Top-tier enterprises: Affected by significant inventory pressures and severe cash cost losses in May, along with low downstream PV module production schedules.

Silicon Wafer Production and Price Outlook

► Production Forecast:

• May 2024 - June 2024: Silicon wafer production schedules will continue to decrease significantly due to high inventory pressures and low market confidence, leading to low purchasing enthusiasm and severe losses.

• June 2024 - September 2024: Production schedules will start to recover, especially reaching a high level in August and September, benefiting from previous inventory reductions and increased year-end installation demand.

• October 2024 - January 2025: Production schedules will remain relatively low and volatile, with weak demand before the Chinese New Year.

• February 2025 - April 2025: With new polysilicon projects coming online and demand recovering, production schedules will start to increase, but this will also lead to oversupply.

► Price Forecast:

• May 2024 - June 2024: SMM believes the monthly average price for silicon wafers will be around 1.1 yuan per wafer, with the lowest price falling below 1.1 yuan per wafer, but the 1 yuan per wafer price support is strong.

• June 2024 - October 2024: Losses and inventory reductions in the previous two months will lead to a price rebound, along with year-end installation demand, resulting in a generally strong trend before October.

• October 2024 - January 2025: Increased operating rates and reduced year-end demand will lead to a continuous price decline.

• February 2025 - April 2025: Post-Chinese New Year demand recovery will lead to another price rebound.