The Star Daily reported on December 24 (Reporter Qiu Siyu) that the photovoltaic Industry is undergoing a "reverse involution".

This evening (December 24), Daqo Energy announced that it will gradually start phased production cuts and maintenance work on its high-purity polysilicon production lines.

The company stated that the current market pattern of supply-demand imbalance in polysilicon has not fundamentally improved, and the industry continues to face severe challenges of overall losses. To strictly implement the spirit of the central economic work conference, regulate corporate behavior, prevent "involution-style" vicious competition, and promote the healthy and sustainable development of the photovoltaic Industry, the company will gradually start phased maintenance work on the high-purity polysilicon production lines at its Xinjiang and Inner Mongolia production bases, implementing orderly production cuts.

On the same day (December 24), Tongwei Co.,Ltd also announced on its official WeChat account that its subsidiary Yongxiang Co. is committed to breaking the "involution-style" competition, promoting the long-term healthy development of the photovoltaic Industry, and will gradually arrange for the four high-purity crystalline silicon production companies under Yongxiang Co. to carry out technological upgrades and maintenance work according to the company's overall production and operation plan, implementing phased orderly production cuts, with specific resumption arrangements to be planned according to the changes in local electrical utility prices and market conditions.

Currently, neither company has disclosed specific production cut plans.

Regarding the impact of the production cut and maintenance work, Daqo Energy stated that this production cut and maintenance work will lead to a reduction in the effective capacity of the company's high-purity polysilicon, resulting in a corresponding decrease in the production and sales of the company's main products. However, from a global perspective, this production cut and maintenance work will enhance the future stability of production facilities and product quality, and help reduce operating costs, thereby decreasing the company's operational losses. Therefore, it is expected that this production cut and maintenance will not have a significant impact on the company's production and operations.

Tongwei Co.,Ltd similarly stated that this technological upgrade, maintenance, and production cut initiative will help reduce business losses in high-purity crystalline silicon under the current market environment and is expected to have a positive impact on the company's overall production, operations, and profits.

Tongwei Co.,Ltd and Daqo Energy are both signatories of the photovoltaic industry's self-discipline convention. A reporter from the Star Daily previously learned from an executive of a photovoltaic company that according to the signed self-discipline convention, photovoltaic enterprises will start to control production capacity from next month (January 2025).

From the current capacity situation, Tongwei Co.,Ltd's subsidiary Yongxiang Co.,Ltd has a high-purity crystalline silicon capacity exceeding 0.9 million tons. Daqo Energy has established two major production bases in Shihezi, Xinjiang, and Baotou, Inner Mongolia, and has formed an annual production capacity of 0.305 million tons of high-purity polycrystalline silicon.

Daqo Energy's third-quarter report for this year shows that based on current market dynamics, product prices, and market trend changes, combined with the annual routine maintenance plan progress, it expects the fourth quarter polycrystalline silicon production to be between 0.031 million tons to 0.034 million tons, with the expected annual production for 2024 to be between 0.2 million tons to 0.21 million tons.

Industry research institution Trendforce's Analyst believes that looking ahead to 2025, the annual output of silicon material can support component production of about 804GW, while demand is only 659GW, indicating a significant supply-demand gap. Considering that there is still nearly 0.3 million tons of silicon material inventory, efforts need to be made to balance supply and demand through reducing operation rates, clearing capacity, and diverting polycrystalline silicon futures.

The comprehensive capacity utilization rate of the industry needs to be adjusted to a range of 50%-60% to basically match the polycrystalline silicon demand for 2025, preliminarily achieving supply and demand balance. If clearance is driven solely through market-oriented methods, it will take approximately 8-16 months.

Additionally, the Analyst further added that silicon material and wafer segments are relatively sensitive to energy consumption and quota control, but there are uncertainties regarding non-mandatory production cuts; the Ministry of Industry and Information Technology's energy consumption control is highly enforceable.

Recently, the procurement project for photovoltaic module equipment for the 0.6 million kilowatt photovoltaic project in Bohu County, part of the National Energy Ba-zhou Pumped Storage Project by Xinjiang Electric Power Ba-zhou Power Generation Company, has caused a stir in the industry. The company explicitly set a maximum bidding limit of 0.6313 yuan/watt, which is significantly lower than the reference cost price of 0.69 yuan/watt in November. Therefore, the photovoltaic industry association raised "four questions" to question the low-price bidding results of the central enterprise project.

Trendforce's Analyst believes that if manufacturers within the self-discipline convention form an internal and external supply chain pricing model, it may encourage industry self-discipline actions from a cost perspective.