2024 Polysilicon Companies Face Losses and Frequent Shutdowns and Production Cuts; Will Prices Rebound in 2025? [Annual Review]

SMM, January 14: 2024 was a year of intense competition in the polysilicon market. Although polysilicon prices experienced a brief increase at the beginning of 2024, the fundamental market oversupply led to unsustainable prices. After this short-lived "prosperity," polysilicon prices entered a downward trajectory. For example, the price of P-type dense polysilicon hit a three-year low of 33.5 yuan/kg at its lowest point during the year, while the spot price of N-type recharging polysilicon dropped to a yearly low of 38.5 yuan/kg.

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As of December 31, 2024, the average price of P-type dense polysilicon was 35.5 yuan/kg, down 23.5 yuan/kg from 59 yuan/kg at the end of 2023, a decline of 39.83%. The average price of N-type recharging polysilicon was 41 yuan/kg at the end of 2024, down 26 yuan/kg from 67 yuan/kg at the end of 2023, a decline of 38.81%.

On December 26, 2024, polysilicon futures were finally listed on the Guangzhou Futures Exchange after years of preparation. The benchmark price on the first trading day was 38,600 yuan/mt. Shortly after the market opened at 9 a.m., the main contract hit the upper limit but could not sustain the momentum. By the close of the day session, the main contract rose 7.69% to 41,570 yuan/mt. As of December 31, 2024, the main contract closed at 42,465 yuan/mt, up 895 yuan/mt from the first day's close, an increase of 2.15%.

In addition to the oversupply in the polysilicon market, the downward pressure transmitted upstream from the low prices of modules was another major factor driving the continuous decline in polysilicon prices. For example, the price of single/double-sided PERC 182mm modules for centralized projects dropped from 0.93 yuan/W at the end of 2023 to 0.66 yuan/W at the end of 2024, a decline of 29.03%. The price of N-type 182mm modules for centralized projects fell from 0.87 yuan/W in May 2024 to 0.67 yuan/W at the end of the year, down 0.2 yuan/W, a decline of 22.99%.

In 2024, the module market also saw significant competition below bid prices, which had a considerable impact on spot market prices. In response, module manufacturers attempted to negotiate higher prices, but end-users showed low tolerance for price increases. Future price trends will depend on the consumption of module inventory, production schedules, and raw material price trends. As supply-demand improvements are expected in H2 2026, SMM predicts that module price declines may slow by the end of 2025–2026, with a rebound likely by year-end 2026.

Polysilicon Production Declined Significantly in 2024 Due to Losses; Will Weakness Persist in 2025?

Amid the continuous decline in polysilicon prices, the industry inevitably faced losses. According to an SMM survey, by April 2024, polysilicon prices had already fallen below the industry's average cost line. This led to widespread production cuts and shutdowns among polysilicon enterprises. In H1 2024, small third- and fourth-tier enterprises gradually ceased production, with no resumption in H2. Operating rates among polysilicon enterprises dropped significantly. By H2 2024, even some top-tier enterprises began reducing or halting production. For instance, on December 24, 2024, production cut announcements from two leading domestic polysilicon enterprises—Tongwei and Daqo New Energy—sparked market discussions. Additionally, GCL Technology revealed plans for production cuts and maintenance during the same period. These three companies collectively hold over 1.6 million mt of polysilicon capacity.

The reasons behind these production cuts and shutdowns include not only the leading enterprises' adherence to industry "self-discipline" agreements but also the severe supply-demand imbalance and widespread losses across the industry.

The production cuts led by top-tier enterprises highlight the severe challenges facing the PV industry. On the policy front, the government began guiding the rational layout of the PV industry near the end of 2023. At the 2024 China PV Industry Annual Conference in December, Wang Shijiang, Deputy Director of the Information Technology Department of the MIIT, emphasized the need to strengthen industry self-discipline, uphold the PV industry's tradition of unity and collaboration, avoid irrational and especially vicious competition, and work together under the association's guidance to help the industry emerge from its downturn.

In 2024, due to global installations falling short of expectations and a sharp decline in polysilicon prices, the early-year estimate of domestic polysilicon production reaching approximately 1.9 million mt was no longer achievable. According to SMM data, total domestic polysilicon production in 2024 was approximately 1.765 million mt, significantly lower than the initial forecast. By phase, H1 2024 production was around 990,000 mt, significantly higher than H2, as polysilicon prices remained in the 50–70 yuan/kg range, ensuring profitability for most enterprises and encouraging active production. In H2, as prices fell to around 40 yuan/kg, widespread shutdowns occurred. By November 2024, most third- and fourth-tier enterprises were in long-term shutdowns, and capacity began to be cleared.

Looking ahead to 2025, according to an SMM survey, representative enterprises currently have no plans to commission new capacity in 2025. However, some capacity built in 2024 but not yet operational may come online, providing a slight increase in polysilicon supply. Overall, the trend will be a significant decline, with further market exits among third- and fourth-tier enterprises. The gradual implementation of supply-side reforms may also lead to the elimination of some capacity from top-tier enterprises.

In summary, SMM predicts that by the end of 2025, domestic polysilicon capacity will decrease to approximately 2.445 million mt, a YoY decline of 10.9%. Meanwhile, under the dual impact of demand and capacity elimination, polysilicon production will also decline significantly. SMM forecasts that domestic polysilicon production in 2025 will drop to approximately 1.62 million mt, a YoY decline of 8.3%.

2025 Outlook

Looking ahead to 2025, SMM expects it to be a year of widespread elimination for polysilicon enterprises, with capacity reductions both domestically and internationally. In China, the combined effects of supply-side reforms and natural market forces will lead to the exit of most tail-end enterprises. Overseas polysilicon enterprises, burdened by "extremely high" electricity costs, will also gradually shut down. Regarding production, SMM predicts that historical inventory pressure and policy impacts will lead to a significant decline in polysilicon production.

Although production is expected to continue declining in 2025 compared to 2024, SMM forecasts that the polysilicon market will still face oversupply relative to demand. Under this supply-demand dynamic, SMM expects domestic polysilicon prices to continue declining YoY in 2025. By phase, prices are likely to weaken further before the Chinese New Year due to the off-season and historically low monthly wafer production. After the holiday, as policy guidance takes effect and downstream demand recovers, polysilicon prices may see a temporary increase. However, it is important to note that capacity elimination requires a long time. In 2025, total polysilicon capacity is expected to remain around 2.4 million mt, significantly exceeding demand, leaving little room for price increases. During the early Q3 and the traditional off-season in Q4, polysilicon prices may pull back again.

In the short term, SMM predicts that polysilicon production schedules in January may continue to decline MoM compared to December 2024. With some shutdown enterprises resuming operations, January polysilicon production is expected to exceed 90,000 mt. As the Chinese New Year approaches, market transactions are likely to remain mediocre, with a slight increase in polysilicon inventory. As of January 10, China's total polysilicon inventory reached 230,000 mt, up 7,000 mt from the previous low of 222,000 mt.