Polysilicon prices set to rise, but just a bit

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The growing trade dispute between China, the EU and the U.S. looks set to trigger a price hike in solar polysilicon, but according to IHS, the increase is unlikely to be detrimental to the industry.

China’s pending move to slap anti-dumping tariffs on imported polysilicon is certain to increase prices this summer, but market factors will limit the magnitude, according to the latest IHS Polysilicon Price Tracker report.

The likely imposition of import duties will cause an increase in global solar polysilicon pricing to $19.50 per kilogram in June and July, up from $16.50 in May, the report says.

The surge represents a turnaround for the polysilicon market, which has seen average pricing decline for seven of the last 10 months.

However, the report forecasts an increase of only 18%, "falling short of the 30% indicator that would represent a major market correction. Prices also would remain below the key $20-per-kilogram mark."

Glenn Gu, senior analyst, photovoltaics, at IHS, said China was "likely to impose anti-dumping tariffs with rates ranging from 30 to 50% on polysilicon imported from the European Union, the United States and South Korea. However, the impact of the duties will be mitigated by factors including long-term agreements that stabilize pricing as well as efforts by buyers and sellers to bypass the tariffs."

For example, Chinese cell manufacturers could reduce the impact of rising prices for imports by blending high-quality silicon with lower-end material to reduce the average cost. The production of high-quality cell requires a superior grade of polysilicon, which is supplied from the EU, the U.S. and and South Korea.

In addition, long-term agreements between Chinese buyers and international suppliers will protect supply agreements by locking in lower pricing, at least for a period of time.

The IHS report also points out that the duties could likely be evaded by using wafer tolling outside of China.

It will also be difficult for Chinese midstream players to accept polysilicon prices above $20.5 per kilogram from the spot market in China with continuous cost pressure from downstream suppliers.

The report furthermore predicts that the global manufacturing overcapacity of solar-grade polysilicon will continue and not allow sustainable local price spikes even with protected local production.