Global solar panel oversupply ‘is still there’

There are some signs that solar module prices could rise slightly in the second half of this year, according to Summer Zhang, Senior Analyst, Solar Supply Chain at OPIS, a Dow Jones company, who spoke to pv magazine during the Word Future Energy Summit held last week in Abu Dhabi, UAE.

“The slight rebounds in the upstream solar market started approximately three weeks ago,” she said. “This originates from polysilicon production outputs, which have been reduced by all major polysilicon makers. This gives them leverage to increase prices. This rebound in polysilicon prices, however, is very slight and we haven’t seen it reflected in PV module prices, which are still following a downward trend. There are very few signs that panel prices may increase before the end of the Chinese New Year holiday. On the other hand, oversupply is still there.”

The analyst also said that the two largest Chinese polysilicon makers are both keeping operating rates below 40%, with the total Chinese polysilicon monthly output at about 100,000 MT. “The average wafer operating rate in China now has been increased to a level higher than 50%, with the total monthly output to be around 48 GW,” she said.

“It is still difficult to predict now if higher polysilicon prices may cascade downward on module prices,” the Editorial Director of OPIS, Hanwei Wu, added. “If that happens, then obviously panel prices will rise again. However, it is unclear if overcapacity can be kept under control in some ways and if a sustainable price rebound is in sight.”

Wu explained that if the current low operating rate of polysilicon production is sustained—maintaining a monthly output of approximately 100,000 MT—combined with the existing inventory of around 300,000 MT, the annual production capacity of 1.5 million MT would be sufficient to meet end-user demand through 2025. “However, prolonged low production rates could lead to workforce displacement and financial pressures on manufacturers, raising concerns about the long-term viability of such market controls,” he stressed. “In addition, the upcoming wet season in three months in regions with significant polysilicon capacity may prompt large factories to increase output capitalizing on the lower hydropower costs, delaying capacity clearance.”

According to Wu, low prices across the whole PV supply chain may not be longer sustainable in the future. “It is a real concern even for PV project developers themselves, as they have projects that have to last for up to 30 years and key factors like quality and warranties may be offered only by a solid and stable industry,” he said. “Now the market is entering a stage where every time we think prices can’t go any lower, the market continues to surprise us. It’s hard to say where the price bottom is, but before it materializes, certain market dynamics are likely to unfold, such as company bankruptcies or industry consolidations. This industry has a recurring pattern of self-inflicted challenges followed by efforts to self-recover and preserve.”

Zhang believes that 2025 should be a key year to reduce overcapacity. “There will be some ups and downs, but these may send wrong signals,” she said. “For example, if we see a very low rebound in module prices, I am sure that manufacturers will increase their production again. This, for example, is already happening in the wafer market, where production rates were cut significantly from the third quarter of last year. More recently, however, we have seen a more wealthy balance between demand and offer, as well as slightly higher wafer prices, and the producers increase production again.”

The largest module manufacturers may benefit the most from the current overcapacity scenario, Wu further explained. “The solar market is now dominated by the biggest five or six manufacturers,” he stated. “This kind of concentration, after this period of consolidation, most probably will increase. It is a matter of survival of the fittest and, usually, the fittest are the biggest. For many of them, for example, it was extremely helpful to diversify their businesses into storage, hydrogen or electromobility, which is something that smaller companies can hardly achieve.”

“The fundamentals for a high price rebound are not there for 2025,” Zhang added. “At least until clear signals production capacity reduction will be clear. Polysilicon futures in China contributed to the polysilicon rebound we have seen in recent weeks. If we see the futures curve projected for the period June-November 2025, we can see a scenario of stable prices. In December, however, prices are much higher, indicating that industry participants believe that a substantial reduction in excess capacity is only likely to occur by the end of 2025,” she added, noting that the main target of most manufacturers for this year is to bring prices closer to production costs.

Zhang estimates the average cost of Chinese polysilicon in 2024 was approximately CNY 45 ($6.18)/kg, with variations across companies depending on their production capacities. “Sources believe occasional sporadic price rebounds in the polysilicon market may happen this year. However, a sustained rise and a stable price level exceeding CNY 50/kg are unlikely to materialize within the year,” she said.

“Currently, the climate doesn’t seem to be favorable to the international free flow of trade,” Wu stressed. “This growing protectionism across the world or in key markets will inevitably change the industry. It is better to hold our breath and see where all this is heading.”

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