Polysilicon: Cycles

One of chemistry's most violent boom and bust cycles

One of chemistry's most violent boom and bust cycles What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

Polysilicon is one of the most violent chemical cycles. Plants take one to two years to build in China, while solar demand has grown in steps, so shortages bring huge prices and a capacity rush, followed by years of losses. The 2022 shortage took prices to about RMB 300/kg; capacity doubled and prices fell more than 80% to about RMB 35-40/kg, below most producers' full cost. The floor is cash cost of the best producers (about RMB 25-35/kg); the ceiling is set by how long new plants take. China's 2025-26 consolidation platform and output curbs are an attempt to manage the cycle by buying and closing old capacity.

The spread to watch Polysilicon price minus cash cost

2025: Daqo sold at an average $5.25/kg against a Q4 cash cost of $4.46/kg; GCL and Xinte reported cash costs of about RMB 25-26/kg and Tongwei about RMB 30-35/kg; tier-two plants were below cash cost (Daqo FY2025; China Polysilicon 2026 report). At July 2026 prices of about RMB 32/kg only the lowest-cost producers cover cash cost.

Booms and busts

2008
A solar boom in Germany and Spain met tight supply from a handful of Western producers.
spot prices above $400/kg (indicative, widely reported)
2021-2022
Solar demand jumped and the 2022 Xinjiang incidents and energy curbs cut supply. Prices reached record levels for the Chinese era and capacity was doubled.
about RMB 240/kg early 2022, peak about RMB 300/kg (n-type) and RMB 330/kg (p-type dense) in Q3 2022
2023-2025
Capacity of over 3.2 Mt met about 1.4-1.9 Mt of demand. Prices fell below cost; Tongwei, GCL and Daqo posted heavy losses.
RMB 210/kg (Jan 2023), RMB 62/kg (Dec 2023), 2024 average RMB 45/kg (indicative); Daqo's 2025 average selling price $5.25/kg (about RMB 38/kg)
Mid 2025-2026
Beijing's anti-involution campaign curbed output (China down 28% in 2025) and lifted prices; ten producers registered a consolidation company in December 2025 to buy and close capacity, but deals stalled and prices fell back as output recovered in 2026.
RMB 50-56/kg at end-2025 (Daqo); OPIS China Mono Premium RMB 52.2/kg (16 Dec 2025) and RMB 32.3/kg ($4.75/kg) on 7 Jul 2026

What drives the cycle

Solar installations. Almost all demand; 690 GW in 2025 and a forecast 649 GW in 2026 (BNEF) means no growth to absorb capacity.
Chinese industrial policy. Consolidation funds, energy-use limits and price floors decide how fast capacity exits.
Power prices. Electricity is the largest cash cost.
Trade rules. UFLPA, US tariffs and India's ALMM create premium non-Chinese markets.

Metrics to track

Metric	Why it matters	Where to track it
Polysilicon n-type dense and granular prices	Main signal	SMM; InfoLink; PVInsights; Bernreuter Research
Industry inventory and operating rate	Supply overhang	SMM; Silicon Industry Branch of CNMIA
Quarterly cash costs (Daqo, GCL)	Floor of the cost curve	company filings
Solar installations	Demand	BNEF; China NEA