China’s Polysilicon Majors Mull Price Floor, Output Cut as Oversupply Weighs
China’s eight major polysilicon manufacturers have held a close-door meeting in Hangzhou to price control and capacity restriction measures, though industry sources are skeptical that the proposed measures will provide meaningful price support due to persistent oversupply.
The participating manufacturers, including Tongwei, GCL, Daqo New Energy and Xinte Energy, collectively account for around 90% of China’s polysilicon production capacity.
According to industry sources, the meeting discussed detailed implementation plans for capacity restrictions and proposed a proposed minimum polysilicon selling price of 43 yuan/kg ($6.39/kg), inclusive of tax. Transactions below this threshold would be considered low-price dumping under the proposed guidelines.
A minimum price floor of 0.79 yuan per watt peak ($0.117/wp FOB equivalent) for TOPCon modules and 0.86 yuan/wp ($0.128/wp FOB equivalent) for back-contact modules were also discussed. TOPCon refers to tunnel oxide passivated contact solar cell technology.
One industry source told Dow Jones Energy that the proposed module price floors could have been derived from estimated production costs using the polysilicon price benchmark.
However, market participants said that industry self-discipline agreements do not constitute legally enforceable price controls, with their effectiveness depending on the manufacturers’ willingness to comply.
A developer source said manufacturers’ offers remained unchanged following news of the meeting, adding that any sustained price recovery would still depend on underlying supply and demand fundamentals.
“These polysilicon majors are competitors and it would be quite strange for them to collaborate on pricing strategies,” the buyer added.
Another industry source questioned whether the proposed price floors would translate into meaningful market support, noting that repeated industry discussions on price controls and production cuts have so far failed to deliver any sustained price recovery.
A source at a Chinese top-tier integrated manufacturer similarly described the proposed fixed module pricing mechanism as difficult to implement, suggesting that efforts by these major polysilicon producers to dictate downstream module prices could be “one-sided wishful thinking”.
In Oct. 2024, the China Photovoltaic Industry Association released an estimated photovoltaic modules production cost of 0.68 yuan/wp in an attempt to address below-cost bidding in large-scale procurement tenders. However, industry sources noted that the price guideline was non-binding, allowing manufacturers to continue submitting bids below the suggested floor.
Besides pricing measures, the Hangzhou meeting called for mutual oversight among manufacturers to identify and report low-price dumping, alongside penalties targeting disruptive, low-price tender procurement practices in state-owned enterprises.
Despite these proposals, industry participants remained doubtful that pricing discipline could be sustained due to weak downstream demand and pressure to reduce inventories before year-end.
“Whether prices will rise will depend on whether module inventory prices can increase. We are in the final quarter of the year and many manufacturers are highly motivated to clear inventories,” a downstream manufacturer said.
In the upstream markets, a major manufacturer expects polysilicon prices to remain under pressure in the fourth quarter due to limited enforcement of cost-based pricing guidelines and substantial inventories across the downstream value chain.
Market participants remained cautious about the prospect of pricing recovery despite expectations of further production cuts in the coming months.
A market source said that while polysilicon manufacturers discussed production controls and output reduction targets during industry meetings in Q3, the cuts were primarily driven by the need to stem cash losses rather than efforts to stabilize prices.
Markets remain cautious about the impact on polysilicon prices despite expectations of a supply reduction in the coming months.
A market source said that beyond the industry meetings and production control targets agreed in Q3, the primary motivation behind manufacturers’ production cuts was to reduce cash burn.
Domestic prices remained relatively stable this week. OPIS assessed EXW China Mono Premium polysilicon at 38.786 yuan/kg on Oct. 15, while EXW China TOPCon modules declined 0.57% on the week to 0.703 yuan/wp basis EXW.
–Reporting by Brian Ng, brian.ng@dowjones.com and Summer Zhang,
summer.zhang@dowjones.com; Editing by Mei-Hwen Wong, mei-hwen.wong@dowjones.com