Polysilicon prices have fallen sharply in recent weeks due to continued oversupply and weaker demand. They briefly fell to low levels before stabilizing at just above CNY50 ($7.31)/kg, although they are still close to all-time lows and below production costs. OPIS analyst Summer Zhang explains pv magazine that despite policy signals and potential future regulations, unclear implementation and persistent overcapacity mean that market conditions remain weak, with further demand declines and possible production cuts or reduced sales expected in the near term.
Polysilicon prices have continued their downward trend over the past three weeks, due to persistent oversupply and weak downstream demand. Prices fell modestly in the first week, followed by a sharper decline in the second week as market sentiment continued to weaken. By the last week of March, spot prices had fallen into the low to mid range of CNY40 ($5.5)/kg in some transactions, although they were generally not maintained. More recently, the market has shown signs of stabilization, with regular trading levels slightly above CNY50/kg.
“Oversupply remains a long-standing structural problem in the polysilicon market and remains the primary driver of recent price declines,” said Summer Zhang, senior solar supply chain analyst at OPIS. pv magazine. “Additional downward pressure comes from weakening demand following China’s cancellation of the 9% export tax rebate for downstream photovoltaic products in April. This led to early shipments in the first quarter and softer orders thereafter. 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 that replacement policies would facilitate capacity rationalization, but the absence of such measures has excessive supply pressure is largely unresolved.”
Chinese authorities have made efforts to stabilize or improve the solar energy 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 key sectors such as photovoltaics and energy storage, while promoting price recovery for products such as polysilicon and wafers. “However, these measures remain largely at the level of policy guidelines, with limited clarity on implementation, and have yet to have a tangible impact on the market,” said Zhang. “Industry participants also noted that any future consolidation efforts should take place within transparent and legally compliant frameworks. Meanwhile, consolidation activity appears to be gaining momentum, with three leading solar manufacturers announcing plans in the first quarter to acquire smaller producers or participate in bankruptcy restructurings.”
Manufacturers have made continued efforts to reduce production costs every year, with annual reports from some major manufacturers confirming a gradual reduction in costs. “We have seen the total production cost of polysilicon processed by Siemens drop from CNY 42–52/kg in 2023 to CNY 36–48/kg in 2024 and to CNY 34–45/kg in 2025,” Zhang pointed out. However, the recent market downturn has pushed prices below the production cost thresholds of most producers, leading to widespread financial losses. Under such circumstances, price declines are largely a passive response to market pressures rather than a proactive strategic choice driven by reductions in production costs.”
Potential environmental regulations could 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 manufacturing facilities. The Silicon Branch of the China Nonferrous Metals Industry Association estimated that, after the implementation of the revised standards, China’s effective polysilicon capacity could decline by about 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 come into effect 12 months after its official release, suggesting that a meaningful market response may not materialize until next year,” Zhang explained.
“According to insider feedback, demand conditions are expected to deteriorate further in the second quarter,” she continued. “In addition, towards the end of the second quarter, the wet season begins in Sichuan and Yunnan provinces, where several major polysilicon production centers are located. During this period, manufacturers typically increase business rates to take advantage of lower electricity costs, supported by abundant hydropower resources. As a result, overall polysilicon production may increase in the third quarter. 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 noted that current polysilicon prices in China are approaching the historic low of just above CNY30/kg recorded in the middle of last year, and that market fundamentals remained weak. “We are already hearing of several specialty manufacturers reducing production to around 50%, while certain leading and vertically integrated manufacturers are expected to reduce production to around 40%,” she said. “Overall, the average operating rate is expected to fall below 50%. Moreover, in April, China officially implemented the cancellation of the 9% export tax rebate for downstream solar products. Consequently, some foreign orders in the first quarter were shipped ahead of schedule, causing a demand shortfall in the second quarter.”
Zhang also noted that Chinese module prices in China have continued to decline due to upstream market dynamics in March, although the decline in module prices was 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 to early March, while domestic module prices have fallen by only 7.05% in the same period,” Zhang pointed out. “Meanwhile, export prices for FOB China modules have remained relatively stable, declining by only 0.83% over the same period, partly due to the cancellation of export tax credits and recent logistics disruptions related to the US-Iran conflict.”
The faster and earlier decline in polysilicon prices relative to module prices is also reflected in the share of polysilicon costs per watt within domestic module prices, as tracked by OPIS. At the start of the year, polysilicon accounted for 15.07% of domestic module prices, while Tuesday’s estimate shows this share falling to 9.08%.
“Market dynamics will ultimately depend on supply and demand,” concluded Zhang. “Currently, some polysilicon producers are halting production and curtailing shipments. This approach allows them to leverage vertically integrated downstream capacity to convert some of their polysilicon inventory into modules. However, upstream market participants announced that if significant policy action is not taken by May, they could make substantial strategic adjustments. As a result, with module inventories likely to be high by then, discount sales or stock clearances at low prices may become increasingly likely.”
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