The photovoltaic (PV) industry finds itself in turbulent waters,grappling with mounting losses primarily centered around silicon material.Despite this current hardship,recent market skirmishes,including a significant stock market crash,might put these challenges into perspective.In the grand scheme of things,if a little discomfort can catalyze change,then perhaps enduring a brief but intense struggle could pave the way for recovery.This notion of embracing short-term pain rather than enduring prolonged suffering may well resonate with stakeholders at silicon material companies,who appear determined to chart their own path toward recovery in the absence of external rescuers.

The ongoing reshaping of the solar industry resembles a drastic measure for survival,akin to a warrior resolving to sacrifice a limb to ensure life.Presently,the pain inflicted on these companies feels inconsequential—more akin to a minor cut that bleeds only a little,rather than the severe agony that could come.However,this provocation seems to have engendered a sense of caution; the reckless abandon witnessed in 2024,where substantial losses seemed to be accepted as par for the course,will likely be a thing of the past in 2025.

On January 6,2025,executives from silicon material firms reconvened in Beijing to further discuss production cuts.A clear outline emerged from this meeting,made up of two pivotal resolutions:

Firstly,participants engaged in constructive dialogue to identify specific details around the reduction in output to ensure the initiative's effectiveness.Secondly,a consensus emerged concerning the target of these cuts—to rein in silicon material prices and guide them back within a fair range.

Reports from insiders have revealed that the commitment displayed by leading silicon producers has far exceeded expectations.Notably,some market leaders have reduced operational capacity to as low as 40%,with complete shutdowns occurring in regions like Sichuan and Yunnan,leaving only Inner Mongolia operational.Meanwhile,other major players based in Xinjiang have followed suit,demonstrating substantial reductions in their output.As a consequence,the monthly output of the latter two companies combined stands at a mere ten thousand tons.

Despite the substantial inventories still lingering across the industry—almost 200,000 tons—recent trends indicate a frenetic accumulation of stock by downstream silicon wafer producers,resulting in declining inventories at silicon material firms.Large-scale silicon manufacturers are reportedly sitting on over a month's supply of silicon in their warehouses,spurred by a shared optimism for an impending rebound in silicon pricing.

Yet,can this pivotal section of the photovoltaic ecosystem truly stabilize under current conditions?

The push for production cuts is characterized by an uncompromising determination to reach their goals.However,not all silicon material companies have chosen to adhere to what some are calling a self-imposed regulatory framework.Some firms have abstained not necessarily due to size constraints — one major player stands as the fifth largest in the industry.The reasons for abstaining vary: some firms produce lower-quality N-type silicon that fails to meet industry standards,while others,emerging players flaunting substantial capacity,remain uncertain of their production license,despite having initiated operations in 2024.Additionally,a previously defiant integrated enterprise based in Wuxi,which dismissed the self-regulatory plan as "childish," has now shown interest in joining the fold.

Regardless of the mixed participation,the underlying activity within the PV sector is anything but tranquil.Although the major players avoided direct representation in these discussions,sales heads from leading silicon companies took the floor to hammer out practical actions moving forward.Reports from the event suggest that collective agreements around pricing goals were tentatively crafted.

One insider expressed that the fervent commitment from silicon producers can aptly be described as "not resting until the objectives are met." Should the constraints on production fail to yield an acceptable market price,a continued reduction in output will be forthcoming.

The definition of a "reasonable price" has stirred considerable debate,with some stakeholders pointing to the industry average cost—including taxes—while others consider the benchmark set by leading manufacturer Daqo New Energy.

Irrespective of one's perspective,it appears the target pricing will still require many companies to operate at a loss,with only a select few advanced companies eking out any profits.Thus,in determining future cutback measures,stakeholders are looking to previous performance metrics.For instance,Daqo reported unit costs in Q3 of 2024 at approximately 46,800 RMB per ton,while cash costs were around 40,200 RMB per ton—all figures pre-tax.

Adding to the discourse,recent data from the China Nonferrous Metals Industry Association also noted a slight uptick in the transaction prices of polysilicon as of January 8,2025,with N-type materials situated in the range of 38,000-45,000 RMB per ton and P-type materials priced between 32,000-36,000 RMB per ton.

Despite these marginal increases in price,it is crucial to acknowledge that the cuts instituted in late 2024 were still insufficient,as businesses continue to experience financial strain.As the first half of 2024 bore witness to major companies operating at full capacity,the stark shift to a more conservative approach in 2025 presents a notable contrast.

Why the shift in strategy,especially among leading enterprises?Expert commentary emphasizes the economic ramifications tied to energy costs; during low water periods,electricity charges elevate the cost of producing silicon by an additional ten thousand RMB per ton.That considered,a current inventory level of 100,000 tons could represent a staggering potential loss avoidance of about 1 billion RMB for leading firms.

At the onset of the voluntary self-regulation initiative in late 2024,three companies boasted operational rates above 50%.Today,however,the overall operational capacity among silicon material producers languishes beneath the 40% threshold.

As leaders voluntarily curb production without hesitation,the remaining non-major players in the sector find their resilience waning,surviving on mere presence rather than competitive viability.Even as major players scale back,smaller entities are struggling just to maintain footing in the market,underscoring the brutal realities of industry dynamics.

Remarkably,consensus is emerging within the silicon material sector during these discussions.Even as debates are expected—part and parcel of corporate discourse—corporate leaders are demonstrating unprecedented alignment regarding necessary production cuts.

Most notably,participation from the industry has grown; where seven companies initially engaged in production cuts,the most recent assembly included three additional players.A special mention must go to Hongyuan Green Energy,once a lone wolf,which joined this movement after previously mocking it.

Delving deeper into the motivations behind the collective shift in stance,two core factors emerge.First,the advent of a "whitelist" scheme dictates that companies partaking in self-regulation are now barred from procuring materials from non-participating firms.This paradigm raises severe supply chain questions for silicon producers,especially as the landscape shifts away from a dominant supply era.

Secondly,the call for survival looms ever larger.The silicon industry,characterized by high capital investment and thin margins,is facing scrutiny from all angles.Take Tongwei for example—a giant in the field,experiencing a 38.73% year-on-year decline in revenue with net losses nearing 4 billion RMB in Q3 2024 alone.Parallel losses ripple throughout the industry,impacting both legacy firms and recent entrants significantly.

Several challenges persist within this high-stakes industry,marked by ceaseless exploration of operational quotas and agonizing production reductions.Even as major companies demonstrate resolve,the overall landscape remains precarious.

Concern lingers that once silicon prices rebound to acceptable levels,smaller,non-compliant firms could reactivate,thereby undermining recent production downsizing efforts.However,these fears may be unfounded as underlying operational cost disparities afford larger enterprises a competitive advantage,thereby stifling any revival of dormant projects within this domain.The future of stagnant projects looms uncertain with profound operational costs ahead.

In summary,the degree to which leading firms can navigate the silicon market directly influences pricing dynamics,leading to inevitable volatility.As 2024 showcased increased competitiveness across segments,the avenues minimizing operational tensions are becoming clear.The industry's understanding of cyclical behavior has now transitioned into a phase where consolidation may be inevitable,suggesting that many smaller firms will continue to fall by the wayside

In light of this restructuring,industry veterans are cautiously optimistic yet profoundly aware that the photovoltaic sector may be ushering into a prolonged period of consolidation.The dual focus on cooperative measures along the silicon value chain and critical self-regulation highlights the inherent need for strategic alignment—an effort aimed at mitigating potential costs while navigating this tumultuous trajectory.

Hope lingers that,despite the contentious and painful process of industry reshaping,the impending winter for photovoltaics may not last indefinitely,leading to a more sustainable path forward and easing the burden of costs incurred along the way.