Leading solar wafer companies like Renesola (SOL), GCL Poly Energy, SAS and others remain under pressure due to the below cost prices of solar wafers. The whole solar wafer industry saw a huge expansion during 2010 and 2011 along with the other parts of the supply chain. As solar wafer equipment prices came down, companies like GCL Poly Energy built gigawatts of solar wafer capacity. GCL Poly Energy became the No.1 solar wafer maker from zero in 3 years. The company destroyed the market leader LDK Solar which was a high cost badly managed company. While LDK Solar is quasi bankrupt, GCL Poly too has shown hundreds of millions of dollars in losses.

Read on GWI List of World’s Top Solar Wafer Companies.

GCL Poly and Other Solar Wafer Companies Hurt

GCL Poly which had built more than 50,000 tons of polysilicon manufacturing capacity and more than 10 GW of solar wafer capacity has been hurt the most. The reason is that solar wafer prices have crashed by almost 80% in the last couple of years. Even the lowest cost companies like SOL and GCL have not managed to post a positive gross margin as prices have gone below cost due the huge overcapacity. Though demand is expected to grow by 19% in 2013, prices will not increase as there is almost 2x supply compared to the current global demand. GCL Poly will remain under pressure because it loses more because of the larger volumes it sells. Renesola has managed to defuse some pressure by rapidly expanding its in-house solar cell and panel business, but it will too lose money.

GCL Poly had already predicted Losses

The Company warned its investors that it expected a “substantial” loss for the year 2012. The company tried to avoid losses, by significant cost reductions earlier. The main reasons for this unavoidable circumstance are:

i) Significant overcapacity in the polysilicon market

ii) The imposition of US duties and

iii) European Crisis.

One good thing that has happened for solar wafer makers is that their customers have stopped expanding their wafer capacity. This will help them in the future when demand rises. Solar wafer companies have also diversified into the downstream part of the business to ameliorate some of the pain. Smaller solar wafer makers will also be forced to exit the business in 2013 as they don’t have the balance sheet to survive another year of losses. While larger companies like SOL and Yingli Green Energy (YGE) have managed to win big loans from the Chinese Development Bank (CDB), the smaller ones have no such comfort. GCL Poly and Renesola have also made impressive advances in cost reduction through new materials and technology (diamond saws).

DigiTimes

After falling 15% in 2012, solar wafer production is forecast to grow 19% in 2013, passing 30GW and recovering to 2011 levels, according to Solarbuzz. However, industry utilization is expected to remain below 60%, and while prices have stopped falling, no significant increases are expected, so profitability for wafer makers will remain challenging.

Multi-crystalline silicon technology is forecast to continue its dominance of the wafer market in the short- to mid-term. However, the higher efficiency solar cells that can be produced using mono-crystalline silicon wafers continue to be in demand for applications where space is restricted. The higher efficiencies enable pricing at a premium over standard multi-crystalline modules. In particular, rapid growth in the Japan market is creating demand for premium efficiency modules that use mono-crystalline wafers.