China's polysilicon market prices fell sharply: initial signs of consolidation

As a result of changes in European subsidy policies and uncertainties in policies that led to the backlog of photovoltaic product manufacturers, the overall price of the entire solar photovoltaic power generation industry chain fell sharply in June.

The June solar energy value chain index announced by Bloomberg New Energy Finance yesterday showed that the spot price of polysilicon fell by 28% month-on-month to US$53.4/kg; the price of 6-inch polycrystalline silicon wafers fell by 23% in June to US$2.39/piece. The new low; downstream polysilicon module prices fell by 15% to 0.92 US dollars / watt.

"Everyone is eliminating inventory"

Due to lower-than-expected downstream demand, the original PV installation peak season was characterized by the off-season after this year's spring. What followed was a decline in the price of photovoltaic products.

In May, solar consulting firm Solarbuzz forecasted that shipments in 2011 will reach 23.8 GW. Due to oversupply, the ex-factory price of components may experience a drop of up to 17%.

After entering the summer, this situation is even more serious. According to Bloomberg data, PV modules fell by 15% in June alone, with 23% for upstream wafers and 28% for polysilicon up to the top.

Last year, the global photovoltaic industry ushered in a period of explosive development, according to IMS Research report, last year's photovoltaic installations increased by 130% year-on-year. However, as the world’s largest photovoltaic application market in Europe continues to reduce subsidies, many agencies forecast that the growth rate of the PV installation market this year may be only about 30%.

Regarding why the decline in the most upstream is most serious, Bai Hongqiang, the deputy secretary-general of the China Silicon Materials Information Research Center, believes that the closer the PV industry is to the government, the stronger the predictability of fluctuations. Because the government's subsidies are relatively certain, the scale of the most downstream photovoltaic application market is relatively predictable. They then send demand upstream to the components, followed by more upstream silicon, and uncertainty is increasing.

"The 28% drop in one month is actually not large." Bai Hongqiang said, "In the previous wave of polysilicon from more than 500 US dollars a kilogram to more than 30 US dollars, the price is almost straight down."

Bai Hongqiang revealed that since Bloomberg's solar value chain index is monthly data, it does not reflect the latest situation. "It has now fallen below 50 dollars a kilogram."

A related person of the top ten PV module companies in the world has told a reporter from the Morning Post that “The recent market is not good, the big companies are not so good, and the days of the small plants are even more sad. Many companies’ orders in July were not very good. We have come into contact with them. Many big manufacturers have lower expectations for the second quarter."

Prior to this, Suntech Power expects a lower growth in shipments in the second quarter, with gross margins not changing much from the first quarter, while giants such as Trina Solar (NYSE:TSL) and Yingli (NYSE:YGE) expect gross margin to increase in the second quarter. Will shrink.

According to the above sources, at the Intersolar PV exhibition held in Germany in June, a small factory even lowered the price per watt to 0.85 euros. "Everybody is bottoming out to eliminate inventory."

The downturn in the PV industry has also been reflected in the capital market. On June 17, China's photovoltaic manufacturer, China Light & Power (Nasdaq: CSUN), announced gross profit margin of around 1% in the second quarter of 2011, compared with previously expected values ​​of 7.5% to 8.5%. The announcement was announced. After that, China Light and Power PV fell by 11.6% on that day.

"The government does not need to increase the subsidies"

Bloomberg New Energy Finance said that overall, the industry is expected to further decline in prices of photovoltaic products in the future. According to Martin Simonek, a solar energy analyst at Bloomberg New Energy Finance, the current market for photovoltaic modules is oversupply, and manufacturers want to reduce inventory through the market. Buyers in the market are demanding cheaper PV modules due to reductions in subsidies. Manufacturers need to be prepared to go through a painful stage, and some manufacturers may even withdraw from the solar industry.

Bai Hongqiang believes that “the fundamental reason for the decline of polysilicon material is the surge in production, but the limited growth in downstream demand, so the initiative began to gradually shift from raw materials to downstream.” Bai Hongqiang predicts that this year, domestic polysilicon production capacity may be expanded to 100,000 tons, compared to last year It is almost doubled.

"The level of the entire polysilicon industry varies greatly. Like GCL-Poly can do almost $20 a kilogram, so even if it is about 50 US dollars a kilogram or less, it can still maintain 100% profit. So it continues to expand production is It is motivated and reasonable.” Bai Hongqiang said, “In contrast, some enterprises with production costs of 50 US dollars and a kilogram will have to suffer more.”

Bai Hongqiang believes that this should be a signal that the polysilicon industry has begun to enter industrial integration.

“But the cost reduction is more conducive to parity Internet access, which is good for operators in the long term.” In the downstream, Tianhua Sunny, a company that focuses on the development and operation of photovoltaic power plants, told the Morning Post reporter that “Realization of PV flat-rate Internet access is expected. It will take around 2013. In the past year or two, the entire industry should focus on adjustment."

Sun Guangbin, secretary-general of the China Electromechanical Chamber of Commerce's solar photovoltaic branch, revealed in an interview with Reuters earlier that three or four of the world's leading photovoltaic cell companies have expressed their urgency and are in contact with the Bank of China, the Export-Import Bank, and the National Development Bank. "Even some of them have to spend 20 billion yuan, 30 billion yuan, and so on, and there are ** projects under discussion. If the funding gap is not large, why should listed companies talk about domestic **?"

However, he said that SMEs have become an integral part of the industry chain and there is little likelihood of a large number of bankruptcies. The vacant market share after its production cuts may be quickly filled up by large companies that are eager to expand, so the industry will have an optimized process.

Sun Guangbin also stated that the upper polysilicon enterprises have high thresholds in the industry, and most of them are powerful companies. Because their profit margins are relatively better, the ability of these companies to bear financial pressure is also better than that of the mid- and downstream photovoltaic cell manufacturers.

Michael Liebreich, CEO of Bloomberg New Energy Finance, believes that the current price of photovoltaic products means that in areas with sufficient solar energy, the cost of large-scale photovoltaic power generation projects can be reduced to 18 cents/kWh, and the cost of photovoltaic rooftops can be reduced to 20. Cents/kWh. In contrast, electricity prices in the United States are 20-25 cents/kWh during the day. The decline in photovoltaic power prices will increase its competitiveness for fossil fuel power supplies.

For the current hard times in the photovoltaic industry, Bai Hongqiang believes that “the government does not need to introduce some policies to increase subsidies because the market is beginning to cool down. The market needs to adjust naturally. The decline in prices is conducive to the growth of the entire photovoltaic industry.”