A recent study conducted by the German raw materials agency DERA suggests that China is poised to reinforce its stronghold in the global market for silicon and polysilicon, posing challenges to the establishment of solar manufacturing capacity in Europe.
The demand for silicon and polysilicon, crucial raw materials in the solar and semiconductor industries, is experiencing a surge. However, the study reveals that the supply, predominantly from China, is surpassing this growth, resulting in consistently low prices and a rising market dominance for China in these critical materials.
As of now, China commands an 83% share of the global market for polysilicon and 75% of the silicon market.
The study projects a further 66% increase in production capacity for silicon by the end of 2027, which already exceeds demand. Global demand for silicon is expected to grow by 37%. The situation is more pronounced for polysilicon, with an estimated capacity expansion of 437%, 93% of which is attributed to China. This expansion is anticipated to outpace the increase in demand, projected at 107%.
These trends are anticipated to lead to notably low prices for silicon and polysilicon on the global market, as well as for solar cells and modules. Harald Elsner, lead author of the study, notes, “With prices this low, rebuilding an independent European solar industry will be difficult.”
Currently, China is the epicenter of silicon-related manufacturing, producing 97% of all silicon ingots and wafers, 78% of solar cells, and 82% of solar modules worldwide. The dominance is further fueled by the advantageous low energy prices in China, as silicon production is an energy-intensive industrial sector. In Europe, competitive silicon production is limited to Norway, where industrial electricity prices range from EUR 0.02-0.03 (USD 0.022-0.033) per kWh.
