China Polysilicon Industry on a Brink

China has become the world’s greatest solar manufacturer in just 4 years as its state backed companies invested billions of dollars into the business. The country’s low cost labor and capital quickly became the world’s biggest by massively driving down costs of making solar wafers, cell and panels. Most of the western companies such as Q-Cells which dominated the industry are either bankrupt or surviving on the brink of bankruptcy. Though China’s solar industry rules most of the crystalline silicon supply chain, it has not been able to dominate the manufacturing of polysilicon which is used as raw material for making the solar panels.

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

China’s companies built small capacities and most of the material produced does not have good quality. The chemical expertise required gave an edge to the established western manufacturers which exported huge amounts of material to China’s solar factories. LDK Solar which was the first Chinese company to make huge poly investments is now virtually bankrupt as its $2 billion 15000 ton poly plant lies idle. The prices of polysilicon have crashed from $400/kg to just $15-20/kg now. This has made most of China’s poly plants non-viable and according to China’s industry associations 43 producer plants are now closed. Only 6 companies are now left as solar panel makers prefer high quality imports over cheap low quality stuff.

GCL Poly is the only major Chinese company in the top 5 poly makers and even this company is suffering from low utilization rates and losses. The company’s poly is obviously inferior, as it sells the poly at very low costs. China imported almost 60% of its 70,000 ton for the first half of 2013 requirements, even as most of China’s domestic capacity remained idle. China has not been able to succeed in polysilicon as western makers like Wacker, Hemock, REC etc. lead in both costs and quality. China’s plan to impose poly duty on imports may not be too practical given that it will hurt its already desperate solar panel industry. It might benefit the small remaining poly makers like Daqo but it will hurt many more solar panel and cell makers.