Solar firms told to stop price gouging amid supply shocks
Authorities order manufacturers to strengthen discipline as polysilicon prices hit 10-year high
Chinese authorities have summoned major solar producers for meetings, ordering them not to engage in price gouging or hoarding as polysilicon prices hit a 10-year high, sending shock waves through the supply chain.
The Ministry of Industry and Information Technology (MIIT) said it, together with the State Administration for Market Regulation and the National Energy Administration, had recently ordered solar polysilicon producers to strengthen their discipline and management.
The ministry blamed the price-gouging and hoarding practices of some firms for the sharply rising prices of some photovoltaic products, although it said the complex international trade environment, the Covid-19 pandemic and high demand were also factors.
The MIIT said solar companies should focus on “the big picture” and the long-term, high-quality development of the industry. Companies should reasonably proceed with the construction of photovoltaic projects and make careful plans to build new largescale capacity, it said.
“The market fundamentals for polysilicon are relatively tight, mainly because of rapid growth in overseas markets for solar photovoltaic panels, plus the limited new supply of polysilicon manufacturing capacity in recent years,” said Lucas Zhang Liutong, director of consultancy WaterRock Energy Economics.
China currently manufactures more than 80 per cent of the photovoltaic panels produced globally, the International Energy Agency (IEA) reported in July.
Under the global call for clean energy to fight climate change, China’s polysilicon prices have reached a 10-year high as solar firms race to expand production.
Several factors have played into the soaring prices.
A US ban on solar panels made in Xinjiang region, which came amid allegations of forced labour last summer, forced China’s solar industry to shift production to other regions, causing delays.
A summer power shortage and droughts in hydropower-rich Sichuan and then Yunnan, along with lockdowns due to surging cases of Covid-19 in some cities, had strained supplies, Zhang said.
Higher raw material costs and a rise in electricity tariffs were also to blame,, he added.
The silicon division of the China Nonferrous Metals Industry Association halted posting prices last month to avoid “excessive interpretation and misunderstanding” of “fluctuating and rising prices that affected the stable operation of the industry”.
Data last updated on August 31 from the division showed the average trading price of polysilicon was about 300,000 yuan (HK$331,000) per ton, almost four times more than the average of 80,000 yuan at the start of last year.
New supply from major polysilicon manufacturing plants would arrive in one to three years, Zhang said. China’s expected relaxation of its zeroCovid policy after the Communist Party’s 20th congress, which begins in Beijing on Sunday, should also help relieve the supply crisis, he said.
But the world still needed to diversify from reliance on China, IEA chief Fatih Birol said.
“China has been instrumental in bringing down costs worldwide for solar photovoltaics, with multiple benefits for clean-energy transitions,” he said in July. “At the same time, the level of geographical concentration in global supply chains also poses potential challenges that governments need to address.”