Polysilicon prices sliding toward historical lows

Polysilicon prices have continued their downward trajectory over the past three weeks, reflecting persistent oversupply and weak downstream demand. In the first week, prices declined modestly, followed by a sharper drop in the second week as market sentiment weakened further. In the last week of March, spot prices had fallen into the low-to-mid CNY 40 ($5.5)/kg range in some transactions, although these were not broadly sustained. More recently, the market has shown signs of stabilization, with mainstream trading levels clustering slightly above CNY 50/kg.

“Oversupply remains a longstanding structural issue in the polysilicon market and continues to be the primary driver behind recent price declines,” Summer Zhang, senior analyst for solar supply chain at OPIS, told pv magazine. “Additional downward pressure has come from weakening demand following China’s cancellation of the 9% export tax rebate for downstream photovoltaic products in April. This led to front-loaded shipments in the first quarter and softer orders afterward. At the same time, previously implemented coordinated controls on pricing, production, and sales among manufacturers have been suspended, while industry consolidation plans have also been put on hold. Market participants had expected replacement policies to facilitate capacity rationalization, but the absence of such measures has left excess supply pressures largely unresolved.”

Chinese authorities have been doing efforts to stabilize or improve the solar market. In March, both the State Administration for Market Regulation and the National Development and Reform Commission issued notices calling for stronger action against disorderly competition in important sectors such as photovoltaics and energy storage, while promoting price recovery for products including polysilicon and wafers. “However, these measures remain largely at the policy guidance level, with limited clarity on implementation, and have yet to produce a tangible market impact,” said Zhang. “Industry participants also noted that any future consolidation efforts would need to proceed under transparent and legally compliant frameworks. Meanwhile, consolidation activity appears to be gaining momentum, with three leading solar manufacturers announcing plans in Q1 to acquire smaller producers or participate in bankruptcy restructuring.”

Manufacturers have made continuous efforts to reduce production costs each year, with annual reports from some large producers confirming gradual cost declines. “We have seen the whole production cost of Siemens-processed polysilicon falling from CNY 42–52/kg in 2023 to CNY 36–48/kg in 2024 to CNY 34–45 /kg in 2025,” Zhang stressed. However, the recent market downturn has driven prices below the manufacturing cost thresholds of most producers, resulting in widespread financial losses. Under such conditions, the price drops are largely a passive response to market pressure rather than a proactive strategic choice caused by production cost reduction.”

Potential environmental regulations may support the reduction of excess polysilicon production capacity and contribute to price stabilization. In September last year, the National Standardization Administration released a draft of new energy consumption standards for polysilicon, introducing stricter efficiency requirements for production facilities. The Silicon Branch of the China Nonferrous Metals Industry Association estimated that, following the implementation of the revised standards, China’s effective polysilicon capacity could decline by approximately 30%. “However, the practical impact and implementation timeline remain uncertain, as the proposal is currently in a draft stage. The final standard is expected to take effect 12 months after official release, suggesting that any meaningful market response may not materialize until next year,” Zhang explained.

“According to insiders’ feedback, demand conditions in Q2 are expected to deteriorate further,” she went on to say. “Moreover, toward the end of Q2, the wet season begins in Sichuan and Yunnan provinces, which host several major polysilicon production bases. During this period, manufacturers typically increase operating rates to take advantage of lower electricity costs supported by abundant hydropower resources. As a result, overall polysilicon output in Q3 may rise. Industry participants generally believe that any short-term improvement in market conditions will largely depend on the implementation of meaningful policy measures, such as capacity reduction initiatives or price stabilization mechanisms.”

The analyst observed that current polysilicon prices in China are approaching the historical low of slightly above CNY 30/kg recorded in mid-last year and market fundamentals continued to remain weak. “We are already hearing several specialized producers cutting output to around 50% while certain leading and vertically integrated manufacturers are expected to cut production to around 40%,” she stated. “Overall, the average operating rate is expected to fall below 50%. In addition, China officially implemented the cancellation of the 9% export tax rebate for downstream solar products in April. Consequently, some overseas orders were shipped ahead of schedule in Q1, creating a demand shortfall in Q2.”

Zhang also noted that Chinese module prices in China have continued to decline following upstream market dynamics in March, although the decrease in module prices has been mild compared to upstream materials. “According to OPIS data, as of this Tuesday, the price of polysilicon in China has fallen by 28.67% compared with the beginning of March, while domestic module prices have declined by only 7.05% over the same period,” Zhang emphasized. “Meanwhile, FOB China module export prices have remained relatively stable, decreasing by just 0.83% in the same period, partly due to the cancellation of export tax rebates and recent logistics disruptions related to the U.S.–Iran conflict.”

The more rapid and earlier decline in polysilicon prices relative to module prices is also reflected in the proportion of polysilicon cost per watt within domestic module prices, as tracked by OPIS. At the beginning of the year, polysilicon accounted for 15.07% of domestic module prices, whereas the assessment on Tuesday indicates that this proportion has declined to 9.08%.

“Market dynamics will ultimately depend on supply and demand, Zhang concluded. “Currently, some polysilicon producers are halting production and limiting shipments. This approach allows them to leverage vertically integrated downstream capacity to convert part of their polysilicon inventory into modules. However, upstream market participants disclosed that if significant policy measures fail to materialize by May, they may implement substantial strategic adjustments. As a result, with module inventories likely to be high by then, discounted sales or low-price inventory clearance could become increasingly probable.”

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