Polysilicon Production in China

• In 2024, China’s polysilicon production capacity was 3.25 million tons. For comparison, in 2021, global production was estimated at 621,000 tons.
• China accounts for 95% of the world’s solar-grade polysilicon production.
• About 2/3 of new capacity was introduced by the four largest Chinese manufacturers.

Price Dynamics and Overproduction

In 2022, prices reached $39/kg, but by the end of 2024 they fell to $4.5/kg, which is below the cost price excluding depreciation. According to CNMIA, prices fell by 6.27% to $4.74/kg in the last week.

The main reasons for the price decline:

• Increase in production capacity.
• Increase in inventories (more than 400 thousand tons at the end of 2024).
• Decrease in the workload of enterprises (11 producers are operating).

Price forecast and supply and demand balance

Prices are expected to remain below $5/kg until 2027 due to high warehouse inventories.

Price growth is possible in two cases:

1. Reduction in production volumes.
2. Increase in the cost of metallurgical silicon.

With a sharp reduction in excess capacity by 2028, a supply shortage may occur.

Impact on solar energy

Lower prices for polysilicon contribute to a decrease in the cost of solar modules.

Forecast for the introduction of solar capacity in 2025:

• Baseline scenario – 720 GW.
• The decrease is due to changes in the pricing mechanism in China (from June 1, 2025).
• Growth to 750-760 GW is possible with continued high demand.

Conclusion

• China continues to dominate polysilicon production, but excess capacity puts pressure on prices.
• Low prices may lead to a reduction in the number of producers and market consolidation.
• In the medium term, the imbalance in supply and demand will remain, which may affect price dynamics after 2027.
• Solar energy development depends on regulation in China and the global market.