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Poly prices in China up 16% from December but still too low for Sustainability

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Polysilicon Prices

The prices of polysilicon have gone up a bit in the last few months as poly producers have sharply reduced utilization to 50% or lower. With prices at $15/kg and costs of $30/kg, many of the smaller poly producers have just shut shop and left the industry. However the bigger players which account for 80-90% of the production are unlikely to go away soon. This means that a Poly price rise won’t sustain much in the next year or so. The reason is that once prices increase, the bigger producers will again increase utilization which will pressure prices once again. The bigger players have tens of thousands of tons of capacity lying idle. The poly industry has not seen any big exits as the bigger producers are well capitalized and have even increased capacity. The weakest player LDK Solar which was forced to shut its plants is investing millions of dollars to reduce costs. Thanks to the Chinese government, LDK Solar will again start producing poly in the future which means that the industry will not come to a supply demand balance any time soon.

Read on GWI List of World’s Top (Solar,Semi) 8 Polysilicon Companies.

Polysilicon which saw a peak of $400/kg in 2008 has seen the spot prices crash by an astounding 96% and is unlikely to see even half of those levels any time soon. The entry of OCI and GCL Poly doubled the production of the industry and this had made all the players unprofitable. The next couple of years will be tough for the poly players as the industry needs to grow quite a lot in order to satisfy all the capacity that has come up.

Read on GWI Polysilicon Manufacturing – Process of Deposition, Industry Growth, Technology Production, Solar Use, Manufacturing Companies, Cost and Prices.

Small Polysilicon Companies Go Bankrupt

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 smaller companies are making massive losses with the production of each kg of polysilicon. 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:

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 in-house 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 polysilicon. It has plants in USA.

5) 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.

6) 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.

US Poly Duties on Chinese Solar Panels

The US imposition of duties on Solar panel imports from China has raised the hackles of the Chinese Government which considers the solar industry to be strategic to its future growth. While it will not affect the Chinese exports in a big way considering the easy workarounds, it has the potential of making the Chinese government react negatively. The biggest losers could be the Polysilicon companies and Solar equipment suppliers based in the USA . Note China imports huge volumes of the polysilicon raw material used in solar panels from USA and South Korea. Not surprisingly, a large chunk of the USA Solar Industry too has protested these duties. Many of the solar companies are in the installation segment where cheaper solar panels from China means more profits and more sales. What is not very well known outside the solar industry is that a major percentage of sales of US polysilicon companies and solar equipment firms goes to China.  Chinese polysilicon companies have closed down due to their higher costs due to stiff competition from non-Chinese players. The Chinese government has a big reason to retaliate against the US solar poly companies now that its solar panel organizations have been hit. The overall effect of the duties on Chinese solar panel companies will not be that big as they already have plans to circumvent the US duties which have been prepared long time ago.

People’s Daily Online

Prices of polysilicon products, the main raw ingredient in solar products, have risen recently due to reduced production and favorable policies to promote domestic demand, injecting some hope into the industry amid its problems with overcapacity, analysts told the Global Times Monday.China, the world’s biggest producer of solar power products, imports half of its polysilicon materials mainly from the US and EU for assembling solar cells and panels that are then re-exported to these markets.The average price of polysilicon reached 136,163 yuan ($21,962) per ton Monday, up 16 percent from mid-December, according to data from market intelligence agency Sunsirs China Commodity Data Group.
“Many polysilicon manufacturers have gone bankrupt and only one out of 10 producers maintained production last year due to overcapacity issues,” Zhang said.However, it is too early to say that the slowdown in the sector has bottomed out, Meng said.

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

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