(Yicai) Nov. 2 -- The price of solar polysilicon materials in China has fallen further after slumping last week amid an excess of supply, pushing producers closer to losing money.

The average price of the new N-type silicon was around CNY75,000 (USD10,248) per ton last week, down 19.2 percent from two weeks earlier, according to data released late yesterday by the silicon industry branch of the China Nonferrous Metals Industry Association. Other silicon materials were trading between CNY60,000 and CNY70,000 a ton, down 15.1 percent to 16 percent.

These were the prices for this month's long-term orders buyers and sellers agreed in late October, Lv Jinbiao, deputy director of the committee of experts at the silicon industry branch, told Yicai. The main reason for the significantly lower prices is that a large amount of new production capacity came onstream in the second half of this year, leading to a worsening in the oversupply, Lv added.

Meanwhile, major wafer producers scaled back on buying silicon materials after they cut production to control inventories at the end of the year, Lv noted. 

China produced about 651,700 tons of polysilicon in the first half, up 91 percent from a year ago, data from the silicon industry branch showed.

Major Chinese makers of solar wafers are less willing to buy raw materials in anticipation of further price cuts and because they have big product inventories, industry insiders said to Yicai. Some that do not have downstream business have even contemplate cutting production since late September, they noted.

Silicon prices are getting closer to the production costs of first-tier silicon makers, and if they continue to decline, producers may suffer losses, Lv pointed out. So prices are not likely to continue to fall much and may bottom out later this year or early next year, Lv added.

Against the backdrop of low prices, oversupply can be eased by delaying the commissioning of newly built projects and by major producers scaling back output in line with downstream demand, according to Lv.

But the sharp decline in silicon prices has benefited downstream players, especially investors in solar power plants, Lv said. After prices fell from over CNY200,000 (USD27,330) a ton early this year, solar panel prices also fell to CNY1.3 (18 US cents) per watt from CNY1.9, which can raise the return on investment at solar farms by at least 2 percentage points, Lv said.

Silicon price swings have greatly impacted earnings at leading producers this year. Among China's four major solar silicon makers -- Xinjiang Daqo New Energy, GCL Technology Holdings, Xinte Energy, and Tongwei -- only Tongwei's net profit rose in the six months ended June 30 from a year ago. But the increase was just 8.6 percent, versus a 312 percent surge in the first half.

Editors: Tang Shihua, Martin Kadiev