Polysilicon prices

Polysilicon prices in China have increased to $20/kg, as we at Greenworldinvestor have repeatedly said. This has been due to a combination of increased end user solar panel demand, as well as a tightness in the polysilicon and wafer part of the supply chain. Another major reason is that China has imposed large AD and CVD on imports of this key raw material from Europe and USA, as a tit for tat policy against imposition of duties by these regions on imports of solar cells and panels.

This has been the case for over one year but now the tightness has started to bite. While this has not put any serious pressure on the solar downstream companies, it will certainly improve the financials of the large poly makers such as GCL, Renesola and Daqo. These upstream companies have not benefited over the last 3 years from the stability in solar panel prices, as the prices of wafers and poly had kept going down because of the overcapacity issues. Now that the supply and demand has more or less balanced, new growth in demand has not been met by a new growth in capacity/supply. This is leading to an increase in wafer and poly prices.

Read about Polysilicon Manufacturing Process.

Though prices of the upstream materials have increased I do not think it has a long way to go further up, given that any increase in raw material prices will lead to a further shrinkage in the margins of the panel makers. These companies do not have a margin to play with, nor can they increase the prices in a cutthroat world market. Also with these prices, both poly and wafer makers will be making decent profits. Making windfall profits in these sectors is probably not possible, given the commoditized nature of these markets. Technology improvements have become incremental with most innovations coming in the process and material usage in the silicon panel manufacturing ecosystem.