(Yicai) Dec. 25 -- China’s Tongwei Group and Daqo New Energy, the world’s two largest producers of solar silicon materials, said they will scale back production of high-purity polysilicon amid falling prices and financial losses.

Tongwei will halt output of high-purity polysilicon from the production bases in Yunnan and Sichuan provinces operated by four subsidiaries, the Chengdu-based firm announced yesterday. Technical upgrades and production line maintenance will be undertaken during the stoppage to achieve phased and orderly production cuts, it said.

Daqo will begin phased maintenance work at its high-purity polysilicon production lines in Xinjiang Uygur Autonomous Region and Inner Mongolia Autonomous Region and lower the output of some lines, the Shihezi-based company also revealed yesterday.

The PV industry has grown quickly, driven by global efforts to transition to renewable energy. But product prices along the solar industry chain have plunged this year, mainly because of increased supply, according to the China Photovoltaic Industry Association. Prices of polysilicon, a critical material used in making PV cells, has fallen by more than 35 percent.

Neither Tongwei nor Daqo, which rank first and second globally for polysilicon production capacity, provided details about how much production capacity they will cut, but both indicated that the moves will help pare their operating losses.

Tongwei reported a net loss of nearly CNY4 billion (USD548 million) in the first three quarters of this year, compared with a net profit of CNY16.3 billion (USD2.2 billion) a year earlier. Daqo turned a net profit of CNY5.1 billion to a net loss of CNY1.1 billion in the period.

Tongwei has an annual production capacity of over 900,000 tons of high-purity solar silicon materials, while Daqo has about 305,000 tons. The combined inventory of Chinese polysilicon producers is about 278,000 tons, which should take two to three months to clear, Yicai learned from industry insiders.

With the industry leaders cutting production and smaller silicon material firms maintaining relatively low operating rates, the insiders expect a gradual decline in silicon material inventories starting from this month.

Editors: Tang Shihua, Futura Costaglione