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Massive Installation Of Polysilicon Capacity Could Lead To Lower Prices Going Forward

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 Why Polysilicon Producers Are Facing Issues

The whole solar supply chain has been hit in the last few months as overcapacity and lower demand has formed a deadly cocktail for the industry.  As per Bernreuter Research, the industry saw a huge increase in capacity to more than 350,000 tons in 2015 growing almost by 15% from 2014. This is expected to further surge by 50% over the next 3 years. This will further pressure the prices as per this research firm. Price of poly has already fallen to $12-14/kg currently, as the slower demand in China has pinched the production companies. The future looks bleak as a huge amount of capacity is expected to come online in China. This will keep the margins of the polysilicon producers low as the capacity will be more than the demand that increase during the same time frame.


I think the biggest reason that the Polysilicon producers are facing issues are:

1) Improvement in efficiency of solar cells and decreased usage of polysilicon per watt of solar panels

2) General industrial overcapacity in China where overinvestment in every industrial sector is sinking price in almost all commodities such as steel, wind turbine, aluminium etc.

The demand for solar energy should keep growing rapidly as prices are falling like crazily and much more than expected. Solar panels are already costing around 35 cents/watt in India and around 40 cents in other places in the world. At these prices, it is easily possible to sell solar power at 5-7 censt/kWh in most places making them competitive with fossil fuel prices.

Though demand has increased, China overinvestment problem has kept solar industry in imbalance for the last 6-7 years. Despite exponential growth from consumers, Chinese producers have always managed to increase capacity at a faster pace ensuring overcapacity and low prices. The problem has been compounded as large state backed companies keep entering the industry periodically with large capacities. Zombie companies such as Suntech, LDK and Yingli keep operating despite being technically bankrupt as state governments do not want these companies to fail, because they might have a huge impact on the employment situation and cause a potential social crisis.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

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