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The broader proposal would see leading manufacturers raise about CNY50 billion to acquire and leverage roughly a third of China’s polysilicon capacity from smaller manufacturers, potentially shuttering about 1 million tons of lower-quality production.
“Industry insiders say the plan’s effectiveness will largely depend on the timing and size of capital injections, including when the subscribed capital is fully paid up and whether follow-on financing can be sustained,” said Summer Zhang, senior solar supply chain analyst at OPIS. pv magazine. “These parameters – in particular the continuity and scale of future funding – are expected to be clarified only gradually as the initiative progresses.”
Zhang said no official guidance has been released on the extent of capacity to be reduced. The only confirmed figure is the platform’s registered capital of CNY3 billion, implying that substantial additional shareholder financing would be required to approach the previously stated target of CNY50 billion.
“The overall consolidation blueprint includes a wide range of outstanding issues, including the size of capacity to be acquired, the total amount of capital to be raised, the target price range for polysilicon, production and sales quotas, and the governance of future polysilicon construction or expansion projects,” said Zhang. “To date, many of these core elements have yet to be clearly defined, at least based on the information released through official channels.”
When asked about the potential impact of expanding polysilicon capacity outside China, Zhang said the risk is conditional. Market participants generally believe that non-Chinese polysilicon in China would only become economically viable if domestic prices stabilize above around CNY80/kg, a level considered difficult to achieve in the near term and more likely in one to two years.
“Non-Chinese polysilicon capacity is indeed expanding and we may see a notable capacity increase next year,” Zhang added. “While this growth is unlikely to derail China’s ongoing efforts to reduce domestic overcapacity, any meaningful progress in capacity rationalization that increases prices in the Chinese market could create an opportunity for non-Chinese producers, especially those with relatively low production costs, to sell material to China, potentially reintroducing competitive pressure.”
Zhang argued that any sustainable increase in polysilicon prices would depend on the timing and size of capital injections, including when the subscribed capital is fully paid up and whether follow-on financing can be maintained.
“That said, more modest effects could emerge as early as next quarter,” she added. “Industry sources indicate that additional capital injections from participating companies are likely and could translate into firmer sales prices. Market participants noted that a portion of future polysilicon sales revenue could be allocated to the platform, effectively introducing a pricing structure that includes both production costs and acquisition-related costs.”
Weak end-market demand is likely to limit price support in the short term, Zhang said. He added that “a meaningful recovery in downstream production is therefore expected to depend on both the effective implementation of the consolidation plan and a sustained recovery in global end-market demand.”
