Polysilicon Price Trend

Price of a Polysilicon plays a very important role in the costing of a solar pv module. Polysilicon prices are surprisingly high at the moment, despite the fact that polysilicon production in China has increased during the first two months of 2022. The increase in production was a little lower than what was expected, and what the industry hadn’t seen coming is a very high demand for polysilicon that is a little unusual for the first quarter of the year, which traditionally can be a relatively weak quarter for the polysilicon industry. Also the Chinese producers such as Tongwei, Daqo and GCL-Poly has been slower than expected, while demand is still growing faster than supply.

Now according to the present scenario as long as demand will remain strong, suppliers won’t have any reason to make concessions on price. “When demand is higher than available capacity, the price is determined by the buyers’ willingness to pay. The market tested this willingness in 2021,”.

Each watt of solar panel requires approximately 3 grams of virgin polysilicon, so a solar panel with a rated capacity of about 540 W_p uses 540 × 3 = 1620 grams of polysilicon i.e., 1.62 kilograms of polysilicon. So, considering the present price trend of US$37.09 per kg, the cost of cells would be US$60.08 which would comprise of 39.74% (considering the cost of a 540 W_p module is US$151.2). If it is a large solar panel of 660 W_p, it will use 660 × 3 = 1980 grams of polysilicon i.e., 1.98 kilograms of polysilicon. Again, considering the present price trend of US$37.09 per kg, the cost of cells would be US$73.44 which would comprise of 39.74% (considering the cost of a 660 W_p module is US$184.8).

While the demand is rising there are handful of suppliers of polysilicon which are listed as follows: –

1. Tongwei (China).
2. GCL-Poly (China).
3. Daqo New Energy (China).
4. Wacker (Germany/United States).
5. Xinte Energy (China).
6. Xingjiang East Hope New Energy (China).
7. Oci (South Korea/Malaysia).
8. Asia Silicon (China).

The Chinese companies contribute about 80% global share in the polysilicon supply and it is expected to increase its market share further. The global production of polysilicon is about 1,00,000 Metric Tonnes (MT) and by the next year it is expected to reach about 3,70,000 Metric Tonnes (MT) in 2023. The current market size of polysilicon is about USD 8.5 billion and it is expected to reach about 11.8 billion in 2028.

If we look at a glance on the price chart of polysilicon, the price has declined to about US$7 per kilogram in early 2020. According to the China Silicon Industry Association, the price of polysilicon soared to US$45.47 per kilogram in the end of August, 2022, due to the post-pandemic price spike which is more than 600% higher than the low price of less than US$7 per kilogram in the second quarter of 2020. If polysilicon prices are to drop, we can only hope for more and more polysilicon manufacturers in the future. However, the current poly silicon price is US$37.09 per kilogram as of October 19, 2022.

Now the spot market price may be much higher than the long-term contract price but since the investment cost of polysilicon factories has not soared, there will be a large number of polysilicon production lines at the end of this year and polysilicon prices are expected to decline in 2023. US Energy Service provider Clean Energy Associates’ (CEA) solar price forecast plan report for the second quarter of 2022 pointed out that with the expansion of polysilicon ingots and wafer manufacturers, the market environment will become more competitive, and cheaper polysilicon will be available at that time. The CEA report pointed out that the polysilicon price is expected to remain at around US$30 per kilogram by the end of this year.

While future polysilicon prices are unpredictable, CEA believes that average wafer prices in 2022 will fall by 23% by the end of 2023. BloombergNEF, a strategic research provider also pointed out that there will be enough polysilicon factories by the end of 2023 to supply up to 500 GW of solar modules. We expect, however, that polysilicon prices may decline in the course of the year, to reach around US$20 per kilogram by the end of December, 2022. In the longer term, industry expect that the global polysilicon industry will be able to meet total demand and by late 2023 there is likely to be overcapacity. Until then polysilicon prices may be subject to many fluctuations.

India has also some capacity under the PLI scheme (Production Linked Incentive (PLI) scheme for Promoting Telecom & Networking Products Manufacturing in India was launched with the objective to boost domestic manufacturing, investments and export in the telecom and networking products by Department of Telecommunications (DoT) on 24th February 2021, effective on 1st April, 2021. If this capacity is also applied in the polysilicon industry, then it shall be a good move of Indian polysilicon industry and the subsequently the solar markets), but probably not until 2024 or 2025. It’s also possible that we’ll see capacity additions in the USA if the proposed manufacturing incentives are introduced.