After a period marked by oversupply and falling prices, the polysilicon market in China may face a new challenge in the coming years: a shortage of the material. The projection was made by the German consultancy Bernreuter Research, which specializes in analyzing the component's production chain.
According to the research, the prices of polysilicon – the main raw material used in the manufacture of solar cells – have been falling sharply since 2022. In that year, a kilo of the material was traded at US$ 39,00. In 2024, this value fell to less than US$ 4,50, below the production cost of most manufacturers.
According to the study, the drop in prices led the industry to reduce production in an attempt to minimize losses and stabilize the market. However, according to the document, the cuts made so far have not been enough to balance supply and demand, and the volume of stock remains high.
Johannes Bernreuter, director of the consultancy, says that unless there is a more significant reduction in supply or an appreciation of the basic raw material, the polysilicon price unlikely to exceed US$5,00/kg by 2027.
Still, the scenario could change in the medium term. Bernreuter Research warns that if the producers continue to restrict production more aggressively to stimulate prices, a new shortage of polysilicon could occur until 2028. The phenomenon would be similar to that recorded between 2018 and 2020, when the industry underwent significant restructuring.
InfoLink Bulletin: polysilicon and wafer prices show stability
Demand should remain strong
Despite supply uncertainties, demand for polysilicon is expected to remain strong, driven mainly by the solar energy sector. The expectation of Bernreuter Research is that between 720 GW and 750 GW of new photovoltaic capacity will be added globally in 2025, reinforcing the strategic importance of the material.
By the end of 2023, the consultancy had already anticipated that the market would undergo a restructuring phase, with a tendency towards consolidation among large manufacturers. Faced with pressure for lower prices, companies with greater financial and technological capacity would be taking the lead in the sector, gradually replacing smaller producers.
Although efforts to control production were recorded throughout 2024, prices continued to fall until May, as reported by specialized media outlets. This scenario also had an impact outside China. One example was the postponement, in April, of an initial public offering related to polysilicon production in Malaysia, due to market instability.
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