China's pending move to slap anti-dumping tariffs on imported solar polysilicon from key countries will generate a surge in pricing for this key raw material in June and July, but the magnitude of the increase will be limited by market factors, said IHS.
The likely imposition of the import duties will cause global solar polysilicon pricing to rise to US$19.50/kg in June and July, up from US$16.50/kg in May, according to IHS. This represents a major turnaround for a polysilicon market that has seen average pricing decline for seven of the last 10 months.
However, the increase will amount to only 18%, falling short of the 30% indicator that would represent a major market correction. Prices also would remain below the key US$20/kg mark.
"IHS believes China is likely to impose anti-dumping tariffs with rates ranging from 30-50% on polysilicon imported from the EU, the US and South Korea," said Glenn Gu, senior analyst, photovoltaics, at IHS. "However, the impact of the duties will be mitigated by factors including long-term agreements (LTA) that stabilize pricing as well as efforts by buyers and sellers to bypass the tariffs."
Polysilicon pricing factors
While the duties will send prices up, other factors will serve to limit the increase.
First, to produce high-quality cells, a superior grade of polysilicon is required. Such high-end polysilicon is supplied from the EU, the US and South Korea. However, China-based cell manufacturers can reduce the impact of rising prices for imports by blending high-quality silicon with lower-end material to reduce the average cost.
Next, LTAs between China-based buyers and international suppliers will protect supply agreements. This will lock in lower pricing, at least for a period of time.
Furthermore, the duties potentially can be evaded by using wafer tolling outside of China.
Meanwhile, it will be difficult for China-based mid-stream players to accept polysilicon prices above US$20.50/kg from the spot market in China with continuous cost pressure from downstream suppliers.
Finally, the global manufacturing overcapacity of solar-grade polysilicon will continue and not allow sustainable local price spikes even with protected local production.
