However, strong demand from mono-Si and multi-Si wafer manufacturers continue to drive the production of polysilicon, which is seeing a sharp rise in prices as the supply tightens in the short run.

The latest price report from EnergyTrend finds that polysilicon prices in China quickly went back up in the latter half of January on account of the robust demand from both mono-Si and multi-Si wafer industries. The average dealing price in the Chinese polysilicon market rose from RMB104~106/kg at the start of January to RMB 115/kg after the Chinese New Year holidays. Quoted prices are still climbing as inventories of major manufacturers are nearly depleted.

In the wafer market, some of the demand is now shifting to mono-Si products. This in turn alleviates the supply shortage of multi-Si products and has caused their prices to level following the consistent increases since the fourth quarter of 2015.

Currently, major mono-Si wafer manufacturers such as Longi and Zhonghuan are in the midst of their capacity expansion plans. The supply of mono-Si product therefore has become tight. Lin pointed that this trend is temporary, and the supply of mono-Si wafers for the entire 2016 will still exceed their total demand. EnergyTrend expects a short-term uptick in mono-Si wafer prices that will coincide with a weakening of multi-Si wafer prices in the second quarter. By that time, mono-Si products will again be priced slightly above their multi-Si counterparts.

Currently, cell and module manufacturers are continuing to fulfill orders that they received before the Chinese New Year holidays. They are still uncertain about the amount of new orders that will be coming in. Demand from China will be the only major support for prices in the downstream market during the second quarter. While EnergyTrend expects manufacturers of mainstream multi-Si cells and modules to continue to operate at full capacity, seasonal factors will soon start to negatively affect prices outside China.

Demand for mono-Si products from PV plants in China is anticipated to expand from 15% in 2015 to 25% this year. This Chinese demand, along with the smaller number of mono-Si wafer and cell suppliers in the market, means that prices of mono-Si products will remain strong and even increase slightly in the short term.