Continuing Slide in Solar Materials
Prices for polysilicon and silicon wafers in China continued their downward trajectory this week, with n-type re-feed and dense polysilicon falling 6.39 percent and 6.42 percent respectively to an average of 45,200 yuan per ton, approximately $6,240. The data, reported by the China Nonferrous Metals Industry Association, reflects persistent weakness in downstream demand that has been pressuring the solar manufacturing supply chain for months.
N-type granular polysilicon averaged 44,000 yuan per ton, while wafer prices also declined across all major formats. The n-type G10L wafer fell to 1.03 yuan per piece, the G12R format to 1.12 yuan, and the larger G12 wafer to 1.33 yuan. Industry analysts attribute the price erosion to a combination of excess manufacturing capacity, seasonal demand patterns, and falling polysilicon costs that have removed a key price floor for wafer manufacturers.
Overcapacity Meets Seasonal Weakness
The Chinese solar manufacturing sector has been grappling with overcapacity since aggressive expansion during 2023 and 2024 brought a massive increase in production capacity across the entire supply chain. From polysilicon refineries to cell and module factories, Chinese manufacturers invested heavily in anticipation of continued rapid growth in global solar deployments.
While global solar installations continue to grow at a healthy pace, the rate of capacity expansion has outstripped demand growth, creating a supply glut that has driven prices down across the value chain. Many smaller manufacturers are operating at reduced utilization rates, and industry consolidation has become an increasingly common topic among analysts and executives.
The seasonal factor compounds the structural overcapacity issue. The first quarter is traditionally a slower period for solar installations in many key markets, as winter weather limits construction activity in the Northern Hemisphere and project developers wait for updated subsidy frameworks and grid connection allocations for the new year.
Downstream Activity and Major Contracts
Despite the pricing pressure on raw materials, major project activity continues at scale. PowerChina announced that its Abu Dhabi branch has signed an engineering, procurement, and construction contract with Masdar for a 2.1-gigawatt solar-plus-storage project in the Mshayrif area. The project features 7.75 gigawatt-hours of battery storage and carries a contract value of approximately 13.96 billion yuan, representing one of the largest integrated solar-storage projects in the Middle East.
Meanwhile, JinkoSolar signed a strategic memorandum of understanding with Australian distributor Blue Sun Group covering two gigawatts of Tiger Neo 3 modules. The agreement builds on more than one gigawatt of deliveries over the past three years and positions JinkoSolar to expand Australia's distributed solar market from its new Sydney headquarters.
Market Outlook
Industry observers expect the pricing pressure to persist through the first half of the year before potential stabilization in the second half, driven by seasonal demand recovery and the possibility of government-led production capacity rationalization measures. China's National Energy Administration has signaled interest in preventing destructive price competition that could threaten the financial viability of the solar manufacturing sector.
For international buyers, the falling prices represent an opportunity to secure solar equipment at historically low costs, though concerns about quality compromises and manufacturer financial stability add complexity to procurement decisions. The global solar supply chain remains heavily concentrated in China, with Chinese manufacturers controlling more than 80 percent of global capacity at most stages of production.
The price declines, while painful for manufacturers, ultimately serve to accelerate solar energy's cost competitiveness against fossil fuel generation, potentially driving faster adoption in price-sensitive markets across the developing world.
This article is based on reporting by PV Magazine. Read the original article.
