China which is the world’s largest provider of solar panels made from crystalline silicon is seeing a large number of smaller polysilicon companies go bankrupt or stop production. The reason is that for many of the smaller companies the price of polysilicon is $25-30/kg while the costs are $40-50/kg .This means that the smaller companies are making massive losses with the production of each kg of polysilicon. Note Polysilicon is a commodity industry like the memory industry and goes through periodic ups and downs when prices can go much below costs. In recent years a large number of companies set up polysilicon plants to benefit from the massive growth in the solar panel demand in Europe. However a massive glut in 2011 led the prices to fall across the supply chain of silicon solar panels. Poly prices fell from a high of $100/kg to $25/kg a drop of almost 75% in one year. This has made many of the smaller poly plants in China stop production as the price is below variable costs. The bigger producers like GCL , Renesola and Daqo have lower costs at around $25-30/kg which means they are breaking even . However for smaller companies the situation is dire as massive capacity expansion by the top polysilicon producers will continue in 2012 keeping prices at around the same level.
1) Hemlock Semiconductor (HSG) – This a a privately held company which is a JV between Shin-Etsu Handotai,Dow Corning and Mitsubishi.Hemlock has the largest poly production capacity in the world and has been trying to rapidly raise capacity to meet growing solar demands.However it has not grown fast enough.
2)Wacker Chemie– This German chemicals conglomerate as increased plant capacities rapidly in Germany and is expanding in the USA as well.Wacker has the majority of its profits coming from it nearly 25000 ton polysilicon capacity.It is one of the world’s major producers of semiconductor wafers as well so uses some of the poly inhouse while selling the rest to Asian customers mostly.
3) OCI Chemical – This Korean chemicals company has seen the most spectacular rise in the poly business and has ambitions of becoming the No.1 player in 2012 overtaking both Wacker and Hemlock.Primarily targeting the solar market,the Korean company has plans of reaching 62,000 tons of polysilicon capacity at its plant in South Korea.Formerly known as DC Chemicals it started production only 3-4 years ago in partnership with Sunpower.
4) Renewable Energy Corporation – This Norwegian Producer was the largest solar wafer producer till a few years ago when it lost its leadership to the Chinese.It is now expanding in Singapore to reduce its high cost and integrating vertically. REC is also one of the biggest producers of Silane Gas which is used in making polysilicon.Like MEMC,it uses both the FBR and Siemens process in producing polysilcon.It has plants in USA
6) GCL Poly – This Chinese company has become one the biggest producers of polysilicon and wafers in 2010 from zero in 2008.Is expanding rapidly but not getting into production of solar cells and panels.The company is also on its way to becoming a Top 3 producer of polysilicon and is expanding by co-locating wafer plants near its customer factories.Has singed massive long term deals with most of the biggest solar panel producers in the world.
7) LDK Solar -This is the biggest producer of solar wafers that are used by crystalline solar panels but is losing its No.1 position to GCL Poly.Is expanding rapidly into other parts of the solar supply chain and could break into top 10 solar panel producer in the next couple of years.The company ran into a lot of debt troubles in expanding its poly plant to 15000 tons but has seemed to return on track in late 2010.
What is Polysilicon or Polycrystalline Silicon
Polycrystalline silicon or Polysilicon( poly-Si or “poly”) is a material consisting of multiple small silicon crystals.The difference between Silicon Metal and Polysilicon is that Poly is highly pure form of silicon and is much costlier.Polycrystalline silicon can be as much as 99.9999% pure (also known as 4N pure,the 4 denotes the number of 9s after the decimal point).Polysilicon was primarily used by the semi industry till 5-6 years ago and the electronic industry used 9N pure polysilicon.The Solar Industry which has become the main user of polysilicon nowadays can do with 6N pure poly.
The price tumble spurred the smallest producers including units of Baoding Tianwei Baobian Electric Co. and Dongfang Electric Corp. to halt plants, according to Xie Chen, an analyst from the China Nonferrous Metals Industrial Association, a trade group that advises the government.
Leshan Ledian Tianwei Silicon Science & Technology Co. and Xinguang Silicon, units of Baoding Tianwei, halted production last year to reduce losses and operating costs. Dongfang Electric Emei Semiconductor Material Co., a unit of Dongfang Electric Corp., also stopped manufacturing.
Zhejiang Xiecheng Silicon Industry Co. filed for bankruptcy in December, the first collapse of a solar company in China.