Analysis of polysilicon plant capacity amid market-driven cycles of shutdowns and restarts

Since 2024, the PV sector has faced severe impacts from overcapacity, leading to a persistent drop in prices. Polysilicon, central to this market, has been particularly affected by intense internal competition. Notably, from mid to late Q2, polysilicon prices have dropped below the industry-wide cost, the industry cash cost, and now even the cash cost line of leading firms. Currently, the entire polysilicon sector is operating at a loss.
During this industry downturn, some companies are maintaining operations through cash flow management, others have shut down, and some have halted new capacity projects. This raises questions about the current and future status of polysilicon capacity deployment.
According to SMM's monitoring of 24 domestic production lines, for the first time, data shows that about five companies have completely stopped production. However, this has not significantly impacted the polysilicon supply.

The decline in polysilicon production is mainly due to lower operating rates at other producers. Some maintained very low operating rates.
SMM reports that due to financial constraints and market pressures, many notable polysilicon projects have postponed construction or production, initiating a quiet market reshuffle.
SMM reports that even overseas polysilicon capacities are impacted, suffering from cost issues and downstream setbacks in Southeast Asia and beyond, leading to sales stagnation in China. In July, some manufacturers cut production, with total overseas output declining from about 8,000 mt to between 5,000 and 6,000 mt.
As H2 2024 unfolds, SMM notes that a decrease in new polysilicon supply projects may ease some supply pressures. However, with an expected output of around 900,000 mt for H2, the polysilicon industry will still grapple with oversupply issues, likely leading to continued business closures.