As of the end of February 2018, China was home to 24 polysilicon makers — including those that had shut down production lines in order to undertake regular maintenance — with an effective production capacity totaling 293,000 metric tons a year. Production for the two months of January and February totaled 47,700 tons, an increase of 27.2 percent year on year.
China’s solar module production during this period reached roughly 8 GW, slightly down from the same period of 2017. All the polysilicon manufacturers that were operating normally were running at full capacity and even beyond, driven mainly by the demand from overseas customers.
Domestic orders at the country’s four leading manufacturers accounted for only 20 percent of their total shipments. Most small and medium-sized manufacturers, however, experienced an average capacity utilization rate in the range of 65 percent, due to weak demand within the domestic market. Although China witnessed newly installed solar PV power capacity of 8.5 GW, actual market demand was limited. In January, solar cell exports were valued at 1.054 billion yuan (US$165 million), up 28.1 percent year on year, but down 3.8 percentage points from the previous month.
Product Prices Continue to Slide
Prices for solar PV products continued to decline in the first quarter of 2018, due to the softness in market demand, combined with cost-cutting technological advances across the industry. The price for polysilicon product has dropped from 150 yuan (US$24)/kg in January to 124 yuan/kg in February, and has continued to drop through March, to 115 yuan/kg. The price for polycrystalline silicon wafers is currently running at 3.6-3.7 yuan/unit, monocrystalline silicon wafers at 4.3-4.5 yuan/unit, and modules at 2.5-2.6 yuan/unit.
Foreign Trade Prospects Have Become Cloudy
On Jan. 5, India’s Directorate General of Safeguards recommended a 70 percent duty on solar PV products (including crystal silicon cells and modules as well as thin-film batteries and modules) imported to the country, as a temporary safeguard measure, for a period of 200 days. And on Jan. 22, the Trump administration approved a 30 percent tariff on imported PV cells (over 2.5 GW) and modules. After China, India and the U.S. are the world’s two leading solar PV markets, and both have imposed punitive tariffs on Chinese imports, greatly affecting the country’s ability to export the product.
The Entire Industry Faces Continued Downward Pressure on Pricing
Overall, prices for solar PV products are expected to remain stable in the first half of the year, however, in the second half, due to the sluggish market demand and the release of new production capacity, a further decline in prices is expected. Prices for polycrystalline silicon products are forecast to stabilize at around 120 yuan/kg by the third quarter, then decline to 110 yuan/kg in the fourth.
Due to rapidly increasing production capacity in the country, expectations are that the prices will fall below 100 yuan/kg in 2019. Solar PV companies that are less competitive in cost may be forced to close up shop, due to increasing production costs and shrinking profits. The price for silicon wafers is expected to decline to 3.3-3.4/unit, while that for modules is expected to follow suit, with a drop to 2-2.1 yuan/watt.
