The polysilicon industry is headed for its biggest boom since a price war started three years ago. It can thank a burst of solar panel orders in China and Japan.
Demand for the commodity used to make photovoltaic cells is expected to jump 15 per cent this year, the most since 2011.
The price of the material, made from super-heated silicon particles and sliced into wafers, has reached its highest since the middle of 2012. Global sales may top US$6 billion at that price.
Manufacturers led by GCL-Poly Energy of China and Wacker Chemie in Germany are expanding production, anticipating higher revenue will restore their margins.
They are benefiting from a renaissance in the renewable energy industry, which last year rivalled fossil fuels for new power generation capacity added worldwide.
"We are seeing a massive recovery in the entire solar industry, also in polysilicon," said Stefan De Haan, an analyst at IHS. "2013 was the year of the turnaround, and the situation will further improve in 2014."
Factories producing the material will be at their busiest in at least two years, according to IHS. All that is an about-face for manufacturers which for the past two years had to idle capacity or post losses as poly prices plunged.
China and Japan are driving the rebound with subsidies for solar panel installations. About 44.5 gigawatts of solar capacity will be added worldwide this year, a 21 per cent increase over last year, according to the average estimate of nine analysts and companies.
The two countries may account for half of all new projects. A gigawatt of electricity is about as much as a new nuclear reactor produces.
Renewable energy accounted for 44 per cent of the new generation capacity added worldwide last year, according to data from New Energy Finance.