China’s Polysilicon Prices Slide in Q1 on Inventory Stockpiles and Policy Ambiguity
Polysilicon prices in China have trended downwards at an accelerating rate in the first quarter of 2026, driven by rising inventory levels, subdued downstream demand and an absence of government measures aimed at stabilizing market prices.
Prices showed signs of weakening in late January, before largely stabilizing for around three weeks during the Chinese New Year holiday, as participants adopted a cautious wait-and-see stance. However, by late February, prices fell continuously over four weeks. According to the OPIS Global Solar Markets Report released on March 17, China Mono Premium—OPIS’s benchmark assessment for mono-grade polysilicon used in N-type ingot production—was assessed at 44.583 yuan ($6.471)/kg, equivalent to 0.094 yuan per watt peak, representing a decline of 16.4% compared with levels recorded at the beginning of January.
The current market consensus is that polysilicon prices have entered a sustained downward trajectory, with values gradually approaching the historical low of slightly above 30 yuan/kg in mid-2025.
Policy Background and Market Drivers
Meanwhile, China’s polysilicon consolidation initiative — aimed at acquiring and retiring excess capacity through the setup of a dedicated platform company—has been effectively stalled since mid-January. This followed directives from the State Administration for Market Regulation or SAMR requiring manufacturers to suspend coordinated “self-regulation” measures involving production, sales and pricing controls due to potential monopoly concerns. As a result, uncertainty has emerged regarding the platform’s future role in capacity management.
In the absence of clear policy support for price stabilization and capacity reduction, key market factors—including persistent oversupply, elevated inventories and weak downstream demand—have become the main drivers of pricing, contributing to sustained downward pressure on polysilicon prices during the first quarter of this year.
Industry sources indicate that the SAMR’s directives have weakened expectations of profitability among polysilicon producers. One leading manufacturer reportedly suspended operations across its facilities in Sichuan, Yunnan and Inner Mongolia since late January, effectively resulting in a full production halt, while several other major producers have reduced operating rates. Market feedback suggests that such measures are necessary, particularly for manufacturers holding substantial inventories to prevent a sharp and disorderly price decline.
Correspondingly, China’s monthly polysilicon production has declined markedly. Data from the Silicon Branch of the China Nonferrous Metals Industry Association shows that output in January 2026 fell 8.3% month on month to approximately 102,000 metric tons. Production declined further to around 84,400 mt in February, marking an additional month-on-month drop of 17.3%. March output is projected to range between 87,000 mt and 89,000 mt, indicating that production levels have approached the minimum threshold required for manufacturers to maintain operational balance.
Market Insights and Short-term Outlook
Despite the declines in polysilicon production, industry insiders generally believe that monthly output continues to exceed raw material demand from silicon wafer production during the same period. As a result, inventories have continued to surpass 500,000 mt, with no clear signs of inventory reduction emerging at present.
Market participants have also noted that the current production cutbacks by polysilicon manufacturers may prove temporary. One source indicated that the onset of the flood season in hydropower-rich regions such as Sichuan and Yunnan is approximately two months away. Thus, polysilicon manufacturers operating in these regions are unlikely to forgo the cost advantages associated with abundant hydropower, including lower electricity prices and reduced production costs. This further supports the industry view that polysilicon inventories may continue to accumulate in the short term.
While many industry participants anticipate that it may take until 2028 for polysilicon inventories to gradually return to a relatively balanced level through prolonged consumption, a source from a leading polysilicon manufacturer indicated that near-term attention is focused on a critical juncture in May.
“Our current strategy involves halting production, stabilizing prices, and limiting shipments, with this approach expected to remain in place until May,” the source stated, further noting that should significant policy measures—such as capacity reduction or price stabilization—fail to materialize by that time, the company may implement a significant strategic adjustment.
Although the source did not disclose the specific direction of this potential adjustment, other industry participants suggested that such changes could have implications not only for polysilicon pricing but also for downstream product markets. A market observer noted that the leading manufacturer is leveraging its vertically integrated downstream capacity as part of its planning strategy. Specifically, instead of shipping polysilicon to the market, the company is converting part of its inventory into wafers through OEM processing arrangements with wafer manufacturers, and subsequently supplying its own downstream cell and module operations. This approach effectively shifts a portion of polysilicon inventory into module inventory.
However, the observer added that once the manufacturer’s cell and module inventories reach elevated levels—potentially by May—the company will need to reassess its position. Market participants indicated that discounted module sales or low-price inventory clearance could then be likely.
Policy Developments
Despite a lack of active intervention, there have been some moves by the government in the first quarter to address the industry’s challenges. On Jan. 28, Minister of the Ministry of Industry and Information Technology Li Lecheng chaired a symposium with key photovoltaic enterprises and industry associations to gather feedback on measures to curb disorderly competition and address industry challenges. The meeting emphasized strengthening sector governance through a combination of capacity regulation, standards guidance, quality supervision, price discipline enforcement, prevention of monopoly risks, protection of intellectual property rights and promotion of technological innovation. These measures are intended to guide the PV industry toward healthier competition and more rational, market-oriented development.
Subsequently, on March 14, the National Development and Reform Commission released its Report on the Implementation of the 2025 National Economic and Social Development Plan and the Draft Plan for 2026. The report, presented during the Fourth Session of the 14th National People’s Congress, held earlier in March, highlighted the need to address disorderly competition in sectors including renewable energy vehicles, PV and energy storage batteries. It also underscored the importance of strengthening product quality supervision and promoting price recovery for key industrial products, including polysilicon, wafers and lithium carbonate.
During the same session, Liu Hanyuan, chairman of Tongwei — the world’s largest polysilicon producer — made several policy proposals. According to local media reports, Liu argued that the PV industry should no longer be managed solely as a conventional manufacturing sector, but rather be recognized for its strategic importance to China’s energy transition, energy security and foreign exchange stability—particularly amid recent heightened global energy uncertainties linked to geopolitical tensions caused by the U.S.-Iran conflict. He suggested that incorporating polysilicon into the broader framework of energy sector management could strengthen coordination between manufacturing and end-use applications, enhance alignment between security and transition objectives, and support more unified policy and regulatory systems.
As part of this approach, Liu proposed three key measures. First, he recommended aligning PV manufacturing capacity planning with national energy development strategies and power grid construction, supported by a coordinated “manufacturing–application–consumption” linkage mechanism. Second, he suggested leveraging China’s Energy Law to establish a market regulation framework, including demand-driven production mechanisms, strengthened price regulation systems and early warning tools to mitigate abnormal price volatility. Third, he proposed establishing a unified national monitoring platform to track core indicators such as capacity, output and pricing, while incorporating polysilicon into the national energy security reserve framework—drawing reference from petroleum reserve practices—and establishing emergency response mechanisms to enhance supply chain resilience.
Industry responses to these proposals have been mixed. Some participants noted that petroleum is a core strategic resource with supply chains highly exposed to international disruptions, whereas the primary challenge facing the domestic polysilicon sector is structural overcapacity, which is fundamentally different from the supply-risk characteristics associated with petroleum. Others, however, view the proposals as evidence that any efforts to integrate polysilicon production and market regulation into broader national policy frameworks are being considered, potentially accelerating the pace of capacity rationalization within the sector.
Overall, industry participants generally believe that policy developments in the first quarter primarily reflect high-level strategic guidance rather than the implementation of concrete operational measures. As such, these developments have yet to exert a direct impact on market prices or supply–demand fundamentals, and uncertainty in the polysilicon market remains elevated.
—Reporting by Summer Zhang, szhang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com