Overseas Demand and Price Fluctuation on China's Polysilicon Industry

Mar. 22, 2011 1:59 AM ET
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Providing industry information, market research, indepth analysis and data from China research and Intelligence. China Research and Intelligence publishes market research reports, industry analytical reports, company reports and industry databases. CRI also provides outsourcing and custom services for research agencies and report readers.
www.cri-report.com - In recent years, China's polysilicon production industry has been developing rapidly, which is mainly due to two reasons: First, as the most important consumer markets of photovoltaic solar cells and related equipment, Germany, Japan, the United States, Spain, Italy, Australia and other developed countries are actively promoting the development and utilization of photovoltaic solar energy; second, due to environmental pollution in polysilicon production and high labor costs, many polysilicon enterprises in Germany, the United States, Japan, etc. are transferred to China. Despite the fact that China's polysilicon production has developed in terms of both technology and output in recent years, polysilicon, a raw material applied in the production of photovoltaic cells, still fails to meet the demand of domestic processing and production but depends on import in quantity.

According to statistics, although the total production capacity of polysilicon in China reached 5,800 tons in 2007, the actual output was only around 1,000 tons and the demand was about 20,000 tons; in 2010, the total production capacity was about 30,000 tons, but the actual output was only around 12,000 tons and the demand reached about 31,500 tons.
As a result, an industrial structure of "the markets and the raw materials are abroad while the intermediates are at home" in China's polysilicon production industry has been formed at present. Once the overseas demand falls sharply and the raw material prices rise sharply, impact will inevitably be exerted on China's photovoltaic solar energy industry. In particular, the midstream industry in the field of photovoltaic solar cell production will be opposed by two sides, thus going against the long-term development of China's photovoltaic solar energy industry.

In fact, while the international price polysilicon was soaring to 500 USD/kg, domestic photovoltaic solar cell production giants and such overseas listed companies as LDK Solar, Changzhou Trina, Canadian Solar all suffer a loss in 2008 Q4 and 2009 H1 due to the substantial rise in raw material prices and the sharp decrease in overseas demand. Although Wuxi Suntech has made a profit, its profits have declined substantially as well. Meanwhile, a large-scale loss occurred in the midstream processing industry and the demand of the field of photovoltaic solar cell production for the upstream polysilicon also reduced drastically, causing that the polysilicon price decreased sharply from a peak of 500 USD/kg to the level of 40 -50 USD/kg. As a result, domestic polysilicon (raw material) production industry suffered overstocked products and a situation of “serious excess production capacity” and has not been pulled out of the slump so far.

In addition, most of China's polysilicon production technology adopts Siemens improvement method and there are basically has no intellectual property rights. China's polysilicon projects are mostly started when the polysilicon price was high and the industry developed at top speed. For this reason, the construction costs of these projects also remained high. Besides, the operating rate has always been low (generally below 50%), leading to its high unit output cost and a lack of competitiveness in the international market. According to statistics, the production costs of China's polysilicon production enterprises are mostly 30-50 USD/kg, which are much higher than the 20 USD/ kg of mainstream manufactures in the international market.

To get more details, please go to http://www.cri-report.com/241-research-report-on-china-polysilicon-industry-2011-2012.html

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