The price of polysilicon has plunged to a level of 16 dollars per kilogram from more than 30 dollars early last year. Given the break-even point of leading polysilicon makers such as OCI is at the level of $18 to $19, the more they produce the more loss they incur. Under these circumstances, the analysts said it is likely that a much higher capacity use triggered by the Chinese government's announcement would exacerbate the current supply glut.

 

Hwang Gyu-won, analyst with Tongyang Securities, said, "Once the solar companies with excess capacities begin stepping up their operations, the industry restructuring that market has longed for will be further delayed."

 

Sohn Ji-woo, SK Securities analyst, said, "Under circumstances where the Chinese government props up marginal solar firms with subsidies, you can't say this is a happy situation for Korean suppliers because it may disadvantage them. Especially in the solar module segment where Chinese companies account for almost 70 percent of the market, Korean suppliers will have a more difficult time."