Latest News

GCL reports that top Chinese polysilicon companies plan to close a third their production capacity and set OPEC style output quotas.

GCL Technology Holdings, which is a Chinese producer of polysilicon (a building block used in solar panels), said that they are in discussions to create a fund of 50 billion yuan (7 billion dollars) to buy and close down about a third production capacity, and to restructure a part of the sector that was losing money.

On Thursday, the top polysilicon manufacturer announced that plans are being discussed for the acquisition and closure of at least 1,000,000 metric tons lower-quality polysilicon production capacity.

Jun Zhu, GCL's director of investor relations, said: "It's like OPEC for the polysilicon industry. The central committee has to agree on the total supply over a certain timeframe and then allocate production quotas among producers."

This plan is a strong signal that the increased rhetoric by the government against overcapacity, which was announced this month, is being translated into action. Chinese industry is struggling with overcapacity, whether it's solar or electric vehicles. Price wars are destroying profits.

GCL Chairman Zhu Gongshan stated at an industry conference held in June that the major firms are working to restructure their industry. Local media reported that producers were in discussions to create an acquisitions fund. This is the first time that the size, scope and timeline of the plan are reported.

The National Development and Reform Commission, the state planner for planning, did not respond immediately to a comment request.

Jun Zhu stated that the proposed closures will leave a capacity of approximately 2,000,000 tons on the market.

According to Bernreuter Research figures, China's capacity for production was 3,25 million tons by the end of 2024. This means that the closures proposed would represent 38% of the capacity.

In early July, President Xi Jinping called for an "end to disorderly price competition." Three days later, the Industry Ministry pledged to end price wars and retire obsolete production capacity at a meeting of solar industry executives.

In anticipation of supply-side reforms, this rhetoric in combination with initiatives by various ministries and provinces has sent industrial commodity prices soaring over the past few weeks. Prices of polysilicon are up by nearly 70%.

Jun Zhu stated that the platform would launch in the third quarter of 2025, and it would begin making purchases of both excess capacity and market inventories in the fourth.

He said that the fund's central board, which is tasked with "making sure polysilicon price fluctuations are within a range that benefits all stakeholders", will be composed of polysilicon manufacturers, platform creditors and possibly regulators. $1 = 7.15 yuan (Reporting and editing by Colleen Fullick in Beijing)

(source: Reuters)