Polysilicon price will continue to decline to $50/kg by the end of 2009 and further to $40/kg next year due to deteriorating oversupply and continued inventory de-stocking. Due to the relatively low entry barriers and cost reduction along the rest of the manufacturing process, module price could decline to $1.6/Wp before end of FY10.
The only way for the China solar industry to find a demand supply balance would be for the polysilicon price to drop to a level so that high cost producers temporarily shut down capacity or reduce capacity utilization. Therefore, for the polysilicon price to stabilize at $70/Kg will require a total solar demand of 15GW next year. Even if there is an unexpected positive policy response over the next 12 months, we believe an end demand of 15GW is far too optimistic. So polysilicon price declines must continue.