Solar-power-equipment makers continued to lift prices this week as soaring polysilicon costs spread through the supply chain and threaten to slow clean-energy deployment.

Tongwei on Monday increased prices for solar cells by 3.2% to 4.1% depending on their size, while LONGi Green Energy Technology lifted wafer prices 3.3% to 4.3% Tuesday. The increases came after prices of polysilicon, the key material in both products, rose 15% since mid-May amid factory shutdowns due to accidents and planned maintenance. 

The average cost of the most expensive grade of polysilicon remained at $44 per kilogram on Wednesday, according to the China Silicon Industry Association (CSIA). The level was unchanged as no deals were signed this week, and the association said prices will grow further in August as supplies are tight.

Higher costs have begun to suppress demand, especially for giant utility-scale solar farms in China that are price-sensitive. Still, Tongwei and LONGi’s increases indicate that there are still buyers willing to pay the higher rates, especially with power-generating fossil fuels like coal and natural gas trading at record highs this year.

“The ability for wafer makers like LONGi to lift product price quotes also implies strong demand,” Dennis Ip, an analyst with Daiwa Capital Markets, said in a research note.

Chinese solar exports have surged this year, especially to Europe, as countries there try to speed up their energy transitions to wean themselves off Russian energy sooner following the invasion of Ukraine. Total exports in May were $4.3bn, nearly doubling from the previous year.

The polysilicon market is expected to remain tight through September, according to Daiwa, before new capacity comes online in the fourth quarter and loosens production bottlenecks.

More stories like this are available on bloomberg.com
Bloomberg