The price premium for polysilicon produced outside China increased during the first quarter, reaching 42pc in March, according to South Korean producer OCI.
Following the Lunar New Year holiday in February, polysilicon prices rebounded after a sharp drop at the start of the year when new production capacity came on line and silicon solar wafer producers consumed inventories.
There was additional price pressure on solar modules owing to a contained release of exports from southeast Asia to the US that had been held by customs officials late last year to determine whether they had circumvented anti-dumping measures.
Prices for polysilicon produced in China have fallen on high inventory levels in the country and aggressive price negotiations for low-quality material by new producers to establish market share, OCI noted. But although polysilicon production is expected to gradually increase in the first half of this year, demand is increasing on high operation rates among downstream wafer manufacturers.
OCI expects prices and demand for polysilicon produced outside of China to remain stable compared to Chinese polysilicon, the company said in its quarterly report. The average price for non-Chinese 99.9999999pc solar-grade polysilicon was $34/kg in March, compared with $24/kg for Chinese material, which has fallen below $30/kg since late 2022. The average price for 99.9999-99.999999pc grade polysilicon was $12/kg in March.
The global solar photovoltaic (PV) industry grew by around 40pc from 2021 to 2022, driven by renewable energy policies. The energy transition is entering a new phase based on the development of a supply chain outside China.
Europe expects to support its solar industry with the Net Zero Industry Act, which has set a target for the EU to produce at least 40pc of the technology it needs to meet its 2030 climate goals. Europe has set a target for renewable energy to account for 45pc of its annual energy consumption by 2030, which would require installation of 100 GW/yr to reach 1.23GW by 2030.
Europe's solar module imports from China, which fell in the second half of 2022, rebounded on strong demand in the first quarter, climbing by 41pc from December to January, OCI said. The region imported around 28.5GW of PV modules and 4.5GW of PV cells.
Europe is expected to increase its installations to 56GW from 43GW and China is expected to reach 138GW from 107GW last year.
Since the announcement of the US Inflation Reduction Act (IRA) manufacturing subsidy, production in the US — which had been limited to solar modules — has been expanding along the supply chain, OCI noted. The US is expected to install 34GW of solar capacity in 2023, up from 21GW in 2022, despite a short-term decline in the residential installation market owing to high interest rates and inventory build-up among distributors.
In response to the IRA, OCI previously announced plans to invest $40mn to expand production capacity at its US solar module manufacturing facility in Texas to 1GW from 210MW. It expects to complete its 350MW second phase expansion by the end of this year and prepare for third-phase expansion to the full 1GW. The plant, which manufactures products for residential systems, will move into manufacturing solar panels for commercial and large-scale projects.
The plant will use polysilicon produced at OCI's Malaysian facility to meet requirements that projects eligible for US subsidies must source raw materials from outside China. OCI is increasing the capacity at the plant in Malaysia to 65,000t from 35,000t, although it has delayed the completion of the phased expansion to 2027 from 2024 in response to the increase in solar-grade polysilicon supply and decline in prices. OCI is moving production equipment to Malaysia from a mothballed plant in South Korea and facilities will be on stand-by for future expansion, the company said. But the company is proceeding with plans to build 10,000t of electronic-grade polysilicon production capacity in Malaysia and an additional 2,500t in South Korea, in response to demand from the semiconductor industry.
