(Yicai Global) Oct. 26 -- Chinese silicon supplier GCL Technology Holdings expects to more than double its output of granular silicon by the end of the year as the price of the key raw material used to make solar panel shows no sign of coming down.

The second phase of GCL’s production base in Leshan, southwestern Sichuan province, is in full swing, boosting the firm’s output of Fluidized Bed Reactor granular silicon to 100,000 tons a year, the Hong Kong-based company said yesterday.

And it expects to reach a capacity of 260,000 tons by the end of the year, a person in charge of the firm’s operations told Yicai Global. The company has put a 60,000-ton granular silicon project in Xuzhou, eastern Jiangsu province into production and another 100,000 ton project is under construction in Hohhot, Inner Mongolia Autonomous Region which should be ready soon.

In the third quarter, GCL produced 26,100 tons of polysilicon, of which 45 percent was granular silicon, according to its latest operating data.

Silicon prices have risen to the highest in a decade this year as demand outstrips supply. The average spot price of the country’s polysilicon dense materials jumped 44 percent in the third quarter from the same period last year to CNY298 (USD41) per kilogram, according to market research firm PV InfoLink. This is also a 16 percent gain on the previous quarter.

As a result, silicon suppliers are racing to hike output. Rival Xinte Energy has 400,000 tons of capacity under construction in the Xinjiang Uyghur Autonomous Region and Inner Mongolia.

China’s polysilicon production capacity should reach 1.2 million tons by the end of the year, and output will reach 820,000 tons, according to the China Nonferrous Metals Industry Association Silicon Branch.

But silicon supply is likely to remain tight as the sector enters peak installation season and more power plants are commissioned, CITIC Securities said. Which means prices will stay high, it added.

The turning point for silicon prices could occur in the second half next year, several executives at PV firms told Yicai Global.

Editors: Shi Yi, Kim Taylor