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PV Price Watch: Polysilicon prices to remain high on unfaltering demand and panic buying

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Polysilicon prices will likely continue rising throughout 2022 and only soften towards the very end of the year, driven by unfaltering demand and panic buying.

The average price for polysilicon rose once again this week, reaching an average of around RMB264/kg (inclusive of China’s 13% sales tax, or US$34.82/kg excluding tax). Prices rose for a fifth consecutive week and now stand within touching distance of last year’s high of RMB269/kg.

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The continued price hikes have defied industry expectations for pricing to soften over the course of 2022 as greater capacity came onstream. At the start of this year industry analyst PV InfoLink projected that polysilicon prices would fall to RMB200 – 190/kg, before falling to somewhere in the region of RMB190 – 150/kg in the second half of the year.

However Q2’s average polysilicon price to date is RMB254.3/kg – some 27% higher than forecasts.

BloombergNEF forecasted for polysilicon prices to fall to between US$20 – 25/kg (RMB134 – 167) during H2 2022.

The below chart illustrates the range of polysilicon pricing seen from Q1 2021 through Q2 2022 against the projections issued in Q1 of this year.

The stubbornly high prices for polysilicon are being attributed by analysts to unfaltering demand and a prevalence of panic buying or hoarding, itself driven by prices remaining higher than expected and indeed rising further.

Last week, China’s National Energy Administration suggested that solar installations in the country could reach 108GW this year, effectively double last year’s total, while Europe’s REPowerEU plan looks set to stimulate further demand in Europe. US President Joe Biden’s intervention to waive solar tariffs on imports from Southeast Asian countries also looks set to move the needle for module demand significantly over the coming months.

Johannes Bernretuer of polysilicon research firm Bernreuter Research told PV Tech Premium that demand outpacing additional output from factories had coincided with a “tendency to hoarding and panic buying”, while new entrants to the solar wafer market were also strategically snapping up feedstock longer-term, itself acting as a drag to available supply.

As a result, there has been no softening in Q2 as might have been otherwise expected earlier this year.

Bernreuter added that there could be additional increases in Q3 as demand continues to outstrip supply, with significant new capacities only expected to ramp in Q4 and, more specifically, towards the end of this year.

“Prices will maybe drop more strongly in December – that will also depend on when and how quickly new entrants will start up,” Bernreuter said.

Xinte’s new facility in Inner Mongolia is expected to begin production from Q3 – earlier than anticipated – but while China’s Silicon Branch indicated this week that two facilities – Inner Mongolia Tongwei II and Leshan GCL – will ramp at the beginning of Q3, Bernretuer remains skeptical.

“I don’t believe that earlier start-ups in the third quarter will change the overall picture much as ramp-up will take time. The widespread expectation is now that polysilicon prices will remain high this year,” he said.

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