China has selected 20 polysilicon makers as the first group of qualified companies following the government's tighter rules for the industry early this year.

The selected companies include the polysilicon units of Jiangsu Province-based GCL-Poly Energy Holdings and Jiangxi Province-based LDK Solar, according to a list posted by the Ministry of Industry and Information Technology on its website for public notice till next Monday.

Polysilicon is the raw material used to make solar cells. China in January announced tighter entry threshold for the oversupplied, energy-intensive and pollution-prone polysilicon industry, setting out tough requirements on scale, technology, efficiency and pollution control, and demanded unqualified firms to quit the sector by the end of this year.

"The companies in the first batch will be the main players in the consolidation drive," said Guolian Securities analyst Zhao Xin.

A booming solar market had triggered a rally in polysilicon prices from US$30 per kilogram in 2005 to over US$500 in 2008 in the spot market, and investment in the sector boomed. But prices tumbled over the past year, and were at around US$30 recently, due to slowing demand from the main European market where governments have slashed incentives on solar projects amid the region's sovereign debt crisis.

Shanghai-listed Leshan Electric Power Co said early this month it suspended production at its polysilicon unit after prices declined. The firm plans to upgrade its technology to trim losses and operation costs.