According to Everbright Securities Research Institute, the price of silicon decreased for the first time this year to US $27.63/kg, 6.1% lower than the previous month. On June 24, PV InfoLink also released price updates, saying that the price of silicon for mono overseas has fallen by 4.2%.

Recently, some downstream enterprises have stopped purchasing highly-priced silicon and asked for a price reduction. Their joint efforts have seen positive results. The prices of wafer and cell have started to decrease, transmitting the pressure to upstream enterprises.

Yesterday, Zhonghuan Semiconductor reduced the price of monocrystalline wafer by 0.41-0.69 yuan/wafer (~0.063-0.107$/wafer), a 8% decrease, in response to the backlog of solar installations around the globe.

In the first half of 2020, the production capacity of silicon is far greater than that of wafers. However, from the second half of 2020, due to the massive expansion of downstream production, the supply of silicon became insufficient.

Recently, silicon manufacturers began to expand their capacities. For example, TBEA has joined hands with JA Solar and Jinko Solar to invest in the production of 100,000 tons of high-purity polysilicon; OCI of South Korea announced to add 60,000 tons of polysilicon capacity. East Hope Group has signed a contract for 250,000 tons of polysilicon project in Ningxia, China. These all have laid a foundation for the production of silicon and wafer to become balanced.

After the last round of industry reshape, the pattern of the polysilicon industry has been significantly improved. The average production cost of advanced capacity in China will reach 39.37 yuan/kg. Data suggests that, the cash cost of first-line production capacity of polysilicon is less than US $7/kg (about 45 yuan/kg), so there is still room for price reduction. Even with a price reduction of 50%, the profit will still be substantial.