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Supply tightness in high-purity quartz, which is used to make an expendable apparatus critical to the manufacturing process that turns polysilicon into ingots, is having an outsized influence on prices in the Chinese solar wafer market, according to latest price announcements and industry sources.

Leading solar manufacturer LONGi Green Energy Technology Co. on March 3 raised its prices for Mono 166mm (M6) and 182mm (M10) wafers from 5.40 yuan/pc ($0.692/pc) and CNY6.25/pc to CNY5.61/pc and CNY6.50/pc respectively, a roughly 4% increase from its last published prices two weeks prior on Feb. 17.

The price hike was expected to be emulated by other suppliers in an industry where market leaders tend to set price directions.

But LONGi's main competitor, TCL Zhonghuan Renewable Energy Technology Co., defied market expectations when it announced on its official WeChat account that it was keeping its wafer prices flat for Mono 182mm (M10) and 210mm (G12) at CNY6.22/pc and CNY8.20/pc respectively, the same as its last published prices on Feb. 4.

High-purity quartz availability was a key reason for the divergence, according to Daiwa Capital Markets memo dated March 6. While LONGi's price hikes were most likely driven by a high-purity quartz shortage and cost pressure, TCL Zhonghuan was able to intentionally keeping its wafer prices below LONGi's as it has the widest imported HPQ supply coverage, according to the Daiwa note.

The shortage became a "core focus" for China's solar industry in late February "due to the ongoing rise in HPQ prices and market talk of multiple wafer production disruptions due to a HPQ quality issue," Daiwa said.

Although quartz is among the most common minerals on Earth, there is a diamond-like variety of it that is white, unadulterated and extremely rare. The ore of such high-purity quartz is mined, crushed then purified to a level as high as 99.9999% pure silica that can used to make crucibles for the solar industry.

These crucibles are used as a holding apparatus in the wafer manufacturing stage and are critical to the process. Molten polysilicon is poured into crucibles, where it grows into monocrystalline ingots that are then sliced into solar wafers.

An HPQ crucible needs to be replaced every six to eight ingot cycles, the International Energy Agency said in its 2022 Special Report on Solar PV Global Supply Chains.

HPQ is also key in the production of N-type wafers, which are essentially the basis of the solar industry's ongoing transition from the current P-type solar panel production method to the more efficient TOPCon and HJT technology.

But production of raw material is largely in the hands of just a few companies. Belgium's Sibelco and Norway's Quartz Corp. supply 80% of the world's HPQ, according to a report from mineral specialist Stratum Resources.

The two companies are also the only ones mining from Spruce Pine in the U.S., which Sibelco describes as "the source of the world's highest quality quartz."

According to a 2021 report from China's Zhongtai Securities, annual demand for HPQ will outpace supply by 1,000-2,000 tons from 2022 to 2024.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Farahdian Aziz, [email protected] and Nicholas Lua, [email protected]; Editing by Hanwei Wu, [email protected]

(END) Dow Jones Newswires

03-14-23 0750ET