China’s Polysilicon Leaders Announce Production Cuts To Arrest Low Prices

Tongwei Group and Daqo New Energy, two of the world’s largest, and China’s largest producers of solar grade polysilicon materials, have announced a cutback on production of high-purity polysilicon amid falling prices and financial losses. The firms ended H1 of 2024 with significant losses from their operations, and in likelihood, H2 has been no better. GCL Technology and Xinte Energy, the two other major produces, are also likely to follow suit, in a final bid to stem losses, and the low polysilicon prices that have had effects down the line on the solar supply chain.  Polysilicon prices in 2024 fell by 35%.

Tongwei is cutting ir stopping production from its plants in Yunnan and Sichuan provinces. Daqo will begin phased maintenance work at its high-purity polysilicon production lines in Xinjiang Uygur Autonomous Region and Inner Mongolia Autonomous Region and lower the output of some lines, it announced this week.

Readers will recall that the China Photovoltaic Industry Association, an industry body with most of the top producers as members, has already indicated a push to set up a special body to limit production through quotas to stem the bleeding from low prices.

Tongwei reported a net loss of close to $548 million in the first three quarters of this year, compared with a net profit of $ 2.2 billion a year earlier. Daqo turned a net profit of CNY5.1 billion to a net loss of CNY1.1 billion in the period. The numbers bring home the point that the solar manufacturers are in no mood to surrender gains made during the booming 2022-23 period, and are being pushed both by the government and their own stakeholders to stem the tide of losses.

Tongwei has an annual production capacity of over 900,000 tons of high-purity solar silicon materials, while Daqo has about 305,000 tons. The initial, unspecified cuts are expected to help clear high inventories lying with producers. The hope is to see prices start to climb by the end of Q1 in 2025, before production is restored. Many polysilicon plants outside China have had to shut or curtail production to stem their own losses, as almost all have a higher cost structure than the Chinese, making them completely unviable. Norwegian Crystals and Norsun have announced their exit from the polysilicon business. REC Silicon has also shut down two polysilicon plants in Norway, with a combined capacity of 7,000 tons, due to high electricity costs.