(Bloomberg) -- The price of polysilicon — a key ingredient in solar panels — should rally through the year-end as producers cut capacity due to a slump in the sector, the China Silicon Industry Association said.
The declines in production are being abetted by seasonal factors including a week-long public holiday in early October and drier weather reducing hydropower output and pushing up power costs, the association said in a statement on Wednesday. It didn’t give a specific price forecast.
Chinese polysilicon prices have tumbled 85% since mid-2022 due to a major build-out of factories that was far more than the market actually needed. There’s been a modest recovery since late July, as companies started to dial back output. Daqo New Energy Corp., the No. 3 producer, cut its output guidance for 2024 after posting a massive first-half loss.
China’s world-leading solar manufacturing industry is going through a consolidation due to a severe glut, which has driven down prices across the supply chain, from polysilicon to finished panels. That’s been a boon for clean energy deployment, with the world expected to hit another record this year, but it’s causing major losses and even bankruptcies.
Polysilicon makers will be hoping that the shake-out in their sector happens faster than the rest of the supply chain because costs to restart production after a temporary halt are high.
Most major polysilicon producers are not operating at full capacity, the association said. More plants are likely to suspend production as their key energy source, hydropower, becomes less plentiful due to drier weather as winter approaches, it said.
On the Wire
US lawmakers are signaling to China that the world’s second-largest economy and its companies face a tough slog in America for the foreseeable future, regardless of who controls Washington after the November election.
Volkswagen AG and its oldest Chinese partner plan to shutter one plant in China and possibly more in response to slowing demand for combustion-engine cars, in a further pullback after the venture’s first factory ceased output.
China will remove its tariff exemptions on some agricultural products imported from Taiwan as Beijing ramps up pressure on the democracy.
This Week’s Diary
Thursday, Sept. 19
- Nothing major scheduled
Friday, Sept. 20
- China sets monthly loan prime rates, 09:00
- China’s 3rd batch of Aug. trade data, including country breakdowns for energy and commodities
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:00
--With assistance from Dan Murtaugh.
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