Two Chinese Polysilicon-Makers Promise to Scale Back Amid Price War
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Tongwei and Daqo are China’s No. 1 and No. 3 polysilicon-makers.
Two of China’s solar equipment manufacturers have announced plans to scale back production to mitigate losses and pull the domestic industry back from a bruising price war.
Tongwei Co. Ltd. (600438.SH) and Xinjiang Daqo New Energy Co. Ltd. (688303.SH), two of China’s largest producers of polysilicon — a key material for making solar panels — announced Tuesday that they would carry out “orderly production cuts and controls” at their plants and would only restore production “according to market conditions.”
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- China’s top polysilicon producers, Tongwei and Daqo, plan production cuts to mitigate losses from a price war and restore industry stability.
- These cuts are a response to supply-demand imbalances and increased electricity prices, aiming to reduce costs despite negatively impacting sales.
- The PV industry faces challenges with production exceeding global demand, leading to falling prices and financial losses, prompting both corporate and governmental measures to stabilize the market.
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Who’s Who
- Tongwei Co., Ltd.
- Tongwei Co., Ltd. is China's largest polysilicon producer, planning "orderly production cuts and controls" due to rising electricity prices and industry corrections. Its subsidiary, Sichuan Yongxiang Co. Ltd., produces over 900,000 tons of high-purity polysilicon annually. The company aims to mitigate losses and promote sustainable industry development by reducing output for technical upgrades and maintenance. Its Shanghai-listed shares fell 0.5% following the announcement.
- Xinjiang Daqo New Energy Co., Ltd.
- Xinjiang Daqo New Energy Co., Ltd. is one of the largest polysilicon producers in China, with a production capacity of up to 305,000 tons per year at its Xinjiang and Inner Mongolia facilities. In response to market imbalances and industry losses, Daqo announced production cuts, inspections, and maintenance at some of its production lines. Despite these measures, aimed at reducing costs and operational losses, Daqo's share price rose by 3.8%.
- Sichuan Yongxiang Co., Ltd.
- Sichuan Yongxiang Co., Ltd. is a subsidiary of Tongwei Co. Ltd., and it can produce over 900,000 tons of high-purity polysilicon annually. Its production facilities are located in Inner Mongolia and the Sichuan and Yunnan provinces.
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What Happened When
- 2020：
- China's solar boom sparked by the government's pledge to peak carbon dioxide emissions by 2030 and reach carbon neutrality by 2060.
- By November 2021：
- Photovoltaic module prices had fallen by nearly half from earlier in the year.
- From 2021 to 2023：
- A surge in installations led to a shortage of silicon materials and polysilicon, increasing gross margins for suppliers.
- 2022 and 2023：
- The capacity added was more than double that of the previous 20 years, pushing production across the supply chain above 1 terawatt.
- October 2024：
- The China Photovoltaic Industry Association organized a forum in Shanghai to urge major players to address 'vicious competition.'
- November 20, 2024：
- The Ministry of Industry and Information Technology revised rules for the PV industry.
- Early December 2024：
- The China Photovoltaic Industry Association convened another meeting to explore solutions for stabilizing the sector.
- Tuesday, 2024：
- Tongwei and Xinjiang Daqo New Energy announced plans for production cuts and controls.
- Wednesday, 2024：
- Tongwei's shares closed 0.5% lower while Daqo's rose 3.8%.
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