The Chinese polysilicon industry risks triggering a global shortage by 2028 if manufacturers cut too much production capacity, market analyst Johannes Bernreuter said in a new report this week.
Bernreuter, the head of Germany-based Bernreuter Research, said the sector faces a “difficult balancing act” as it responds to sustained losses from plunging prices and growing inventories. His firm’s new “Polysilicon Market Outlook 2029” report outlines detailed supply, demand and price scenarios through the end of the decade.
China expanded polysilicon capacity to 3.25 million MT by the end of 2024, accounting for about 93.5% of global output, as a supply crunch pushed prices to $39/kg in 2022. Prices have since collapsed below $4.50/kg, undercutting cash costs for most producers and triggering deep losses.
The four largest Chinese manufacturers accounted for two-thirds of new capacity. Bernreuter said Tongwei’s strategy to underprice smaller rivals has failed so far, as many new entrants are backed by state-owned or well-capitalized parent companies. As a result, excess supply pushed inventory to 400,000 MT by late 2024.
In December 2024, 33 Chinese polysilicon and solar firms agreed to cut output, but Bernreuter said the reduction has been insufficient to rebalance the market. He forecast that prices are unlikely to rise beyond $5/kg through 2027 unless production is curtailed more sharply or feedstock costs rebound.
Still, Bernreuter warned that a major shakeout in China’s polysilicon market could overshoot and spark a repeat of the 2018-20 cycle, when capacity cuts amid oversupply led to undersupply.
“A major industry shakeout will lay the ground for a new shortage by 2028,” said Bernreuter.
Bernreuter said he remains bullish on long-term PV growth, despite weakening demand earlier this year, following China’s shift to market-based payments for distributed solar. He lowered his 2025 global installation forecast from 750 GW (DC) to 720 GW, but a May surge in China could still support the higher estimate. He projected 1,900 GW of annual installations by 2029.
The 102-page report also includes updated price forecasts, supply-demand modeling inside and outside China, and cost comparisons for Siemens-process and fluidized bed reactor technologies.
Earlier this month, US market benchmarker OPIS reported that prices for high-purity polysilicon used in n-type wafer production in China have fallen 11.8% since peaking in early April, with futures data suggesting a further 13% decline by November. While OPIS said it expects ongoing price weakness through late 2025 due to persistent oversupply, Bernreuter Research cautioned that aggressive capacity cuts could trigger a market shortage by 2028.
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