(By Balachander) Global demand and pricing in October for solar polysilicon dropped at the highest rate seen since February, pointing out that supply still exceeds demand, according to information and analytics company IHS Inc. (NYSE: IHS).
Spot market pricing for 9N solar polysilicon in October tumbled by more than 9 percent, while the contract segment fell around 1 percent, IHS reported.
Pricing for the 6N to 8N grade declined by 7 percent on the spot market, and the contract segment plunged by more than 8 percent, the firm added.
"Worldwide polysilicon demand declined last month, with a fall in shipments on both the contract and spot markets," said Glenn Gu, senior analyst, photovoltaics, at IHS. "Not only did overall shipment volumes in October fall by 14 percent from the month before, supply levels and inventories also decreased in October as second- and third-tier Chinese suppliers reduced production."
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Still, Gu said, these manufacturing cuts weren't sufficient to bring supply in balance with demand.
The analyst expects pricing to decline further in November before a potential rebound commences in the December and January time frame.
Gu said suppliers are trimming production, inventories in the channel are continuing to be depleted and most industry players are expecting a rebound in demand in 2013.
"Because of this, spot market pricing for solar polysilicon will uptick slightly at the start of next year," the analyst said. Even so, spot prices will remain significantly lower than those on the contract market, causing solar polysilicon suppliers to continue to cut contract prices as they strive to catch up with the spot market.
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"Overall, this indicates that supply will remain in excess of demand, and that pricing will return to a state of decline later in 2013," the analyst said.