LONGi raises silicon wafer prices as rally resumes

Chinese solar silicon wafer manufacturer LONGi has raised its prices for the third time this year, as the market has resumed its rally after a dip in the fourth quarter.

LONGi raised its prices today for P type M10 182/247mm wafers to Yn6.50 from Yn6.38 in late January, for P type M6 166/223mm wafers to Yn5.45 from Yn5.35 and for P type 158.75/223mm wafers to Yn5.25 from Yn5.15. The company raised prices twice in January after cutting them in November and December for the first time since May 2020.

Silicon wafer prices fell in the fourth quarter as unplanned production outages and ongoing logistics disruptions at several downstream solar module producers cut demand. Some solar project developers have delayed equipment purchases and installations as tight supply for raw materials such as polysilicon, silicon metal and solar glass had raised costs continually since mid-2020.

But wafer supply remained tight and an earthquake in China disrupted production in January. In addition, polysilicon prices continued to rise in the fourth quarter as producers passed on rising costs.

China's Tongwei, the world's largest polysilicon manufacturer, reported a 112.35pc increase in its net profit for the December quarter, driven by a substantial rise in prices on tight supply and growing downstream demand. The company ran at full production capacity in 2021, selling 107,700t of polysilicon, a 24pc increase from 2020. Tongwei plans to bring a new 50,000 t/yr plant online in Baotou this year as well as a 200,000 t/yr plant in Leshan. The company expects to have a total capacity of 330,000 t/yr by 2023.

Chinese polysilicon producer Tianjin Zhonghuan Semiconductor (TZS) said in its preliminary results that it plans to accelerate the commissioning of new production lines to increase its production capacity. The company is investing in new projects in Tianjin and Yixing, Jiangsu in China.

Demand is rising for both solar-grade and semiconductor-grade polysilicon. Norway-based REC Silicon said last week that around 200GW of solar silicon modules were produced in 2021, consuming an estimated 575,000t of polysilicon. The company expects solar module production to rise to 240-250GW in 2022, lifting polysilicon consumption to an estimated 650,000t. Additionally, growing demand from data centres, 5G telecom, automotive and Internet of Things applications is raising consumption of semiconductor-grade polysilicon and a substantial expansion of capacity is needed to meet forecast demand.

With capacity utilisation rates near 75pc, REC Silicon expects polysilicon prices to remain supported throughout 2022.

Over the longer term, REC expects demand for solar photovoltaic installations to grow by 11pc on an annual basis to 2025, which could provide support for polysilicon and silicon wafer prices. With the major polysilicon producers announcing large-scale capacity expansions for this year, there is potential for the polysilicon market to become oversupplied in the future, but "this industry has a history of announcing expansions and not following through on it", REC Silicon chief executive James May said in the company's quarterly earnings call.

"Clearly with the expansions that have been announced there is enough polysilicon additions to create a substantial oversupply of polysilicon that looks to begin in 2023. There are several of those announcements from credible companies that have announced expansions, but they have announced expansions only if the market supports those expansions," May said, adding that a doubling of production capacity would bring down polysilicon prices and would not support the full volume of capacity that has been announced. REC expects polysilicon prices to drop in the range of investment returns as capacity is built and brought on line.

"What we see going forward is a bifurcation of the markets more or less that will have a market inside China and a market outside China with some protection," May said. REC is looking to demand for capacity outside China to provide sufficient support for REC to restart its Moses Lake facility, which shut down in 2019 as US restrictions on trade with China prevent the company from selling its polysilicon to Chinese solar module and panel manufacturers. But the stalling of the US infrastructure bill could further delay the establishment of a supply chain for its products, as China continues to account for more than two thirds of the market.

By Nicole Willing