Chinese silicon giants cut production, driving price concerns
Several leading Chinese silicon manufacturers have cut production, raising concerns about short-term upward pressure on polysilicon prices.
Tongwei and Daqo have confirmed plans for technical upgrades and maintenance across their polysilicon facilities, with output to be reduced in stages. Similarly, Hong Kong-listed GCL-Poly has told Chinese media outlets that it will enter a phase of maintenance and lower production.
The combined capacity of these three companies accounts for more than half of the global silicon supply, and their adjustments are expected to significantly affect the PV supply chain.
Tongwei ha attributed the cuts to the dry season in southwestern China, which has driven up electricity prices. With low silicon prices, the company has temporarily reduced output. Its subsidiary, Yongxiang, will implement the cuts at six polysilicon production plants in Sichuan, Yunnan, and Inner Mongolia, with a total capacity of more than 900,000 tons per year.
Daqo New Energy has cited a persistent supply-demand imbalance in the polysilicon market, which has deepened industry losses. The company said it plans to gradually reduce output and conduct maintenance at its Xinjiang and Inner Mongolia production lines. Daqo has an annual polysilicon capacity of about 305,000 tons, primarily concentrated in these parts of China.
GCL-Poly, although less specific, has voiced support for the China Photovoltaic Industry Association’s (CPIA) self-regulation initiative. It has promised to disclose further production changes through official announcements. By the end of 2024, GCL-Poly said it expects its silicon capacity to reach 480,000 tons, with shipments totaling 207,000 tons in the first three quarters.
Silicon prices dropped below cash cost levels in May 2024, triggering heavy losses for major producers. Tongwei, Daqo, and GCL-Poly reported combined net losses of CNY 4 billion, CNY 1.1 billion, and CNY 3 billion, respectively, for the first three quarters of 2024. Analysts said the production cuts are a collective move to stabilize prices.
Following these announcements, Chinese silicon futures surged on Dec. 26, with all contracts hitting the daily trading limit. Prices for all seven contracts rose 13.99%, closing at CNY 44,000 per ton.
Data from the China Nonferrous Metals Industry Association’s (CNMIA) Polysilicon Branch showed a modest rise in polysilicon transaction prices this week, with increases of 0.74% to 2.7% across key product categories.
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