China's polysilicon profits dropped from 500% to 100%

According to an industry report submitted by the China Electronic Materials Industry Association to the National Development and Reform Commission, by the end of June 2009, 19 polysilicon projects have been put into operation in China, with a production capacity of 30,000 tons/year, and more than 10 companies are under construction. Polysilicon project, the total planned production capacity is expected to exceed 100,000 tons by 2010. In 2008, the total demand for polysilicon in China was only 17,000 tons. If these capabilities are fully realized, they will exceed the global demand by more than two times.

Therefore, the issue of whether or not the polysilicon production capacity is excessive has caused hot debate in the industry. Since July of this year, the photovoltaic industry has experienced a general warming for more than half a year. After years of free development, the polysilicon industry has attracted the attention of the State Council. The polysilicon industry faces the timing of shuffling.

The industry expects that before the end of the year, a more specific, industry-specific guidance policy for the polysilicon industry will be released.

Six ministries investigate excess capacity In fact, the hot polysilicon industry has attracted a lot of attention at the national level, which has never been seen in the past. From September to October, a research team formed by the six ministries and commissions including the Industry Coordination Department, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology of the National Development and Reform Commission carried out a comprehensive investigation on the issue of excess capacity in the polysilicon industry.

All this stems from the fact that the executive meeting of the State Council on August 26 pointed out that new industries such as polysilicon tend to be subject to repeated construction and excess capacity.

“This year, the National Development and Reform Commission and other ministries invited us to the forum to talk about the overheated investment in the entire industry. On August 11, several major ministries and commissions jointly held a symposium in Beijing. Our company, as well as Luoyang Silicon High Technology Co., Ltd., LDK Solar High-Tech Co., Ltd. of Jiangxi LDK has all talked about issues including production, scale, cost, profit, etc., said Lu Jinbiao, deputy general manager of Jiangsu Zhongneng Silicon Technology Co., Ltd., recently said.

At present, solar photovoltaic power generation is booming. This industry chain includes polysilicon, silicon wafers, photovoltaic modules, and solar panels. Before 2009, 80% of the cost of the entire photovoltaic industry was concentrated in the upstream polysilicon production segment, and the profit margin was as high as 500% or even as high as 800%.

"In 2007 and 2008, it was a snap purchase. How much to get the goods depends on the relationship," said a sales manager at Zhongyang Silicon, Luoyang, Henan. "Since last year's financial crisis, the price of polysilicon has also dropped all the way to $60/kg. 30% of the cost of the entire industry chain, but our goods are still very tight."

Profits: reduced from 500% to 100%

The price of polysilicon soared from the first 30 US dollars/kg in just 3 years to the highest of 400 US dollars/kg in 2008, and then fell to the current 60 US dollars/kg, with too many crazy stories.

A management team of Wuxi Suntech Solar Power Co., Ltd. (STP.NYSE) stated to the Morning Post that the initial sample was that Germany, Belgium and other European countries announced their efforts to promote photovoltaics, and that they were doing so quickly in the context of such overseas demand. And listed in the United States, this began the 100% compound growth of the entire photovoltaic industry in recent years. Wuxi Suntech is a global leading high-tech enterprise specializing in R&D, manufacturing and sales of crystalline silicon solar cells and modules, silicon thin-film solar cells and photovoltaic power generation systems.

"As long as you produce a product, you don't have to calculate the cost. There are always several times the profits waiting for you." The above-mentioned Luoyang Silicon Silicone Company recalled to the Morning Post reporter the wonderful sales scenario.

“The price of polysilicon is generally more transparent. With China’s soaring growth rate, it is seriously in short supply. How could it not cause soaring growth? Not to mention such high profits, how can there be no hype?” The above-mentioned Wuxi Suntech personage told the Morning Post reporter.

As a raw material of the photovoltaic industry, the scarcity of polysilicon has become the biggest bottleneck restricting the development of China's photovoltaic industry at that time.

China's total production of polysilicon in 2006 was only 87 tons, which rose to 1,139 tons in 2007 and increased to 4,300 tons in 2008, which is tens of thousands of tons worse than the market demand. At the same time, from 2001 to 2008, China's photovoltaic industry increased by nearly 600 times in 7 years, and China's PV cell production reached 2 million kilowatts in 2008, maintaining its position as the world's largest, accounting for 30% of the global share, in 2008. Of the top 25 solar cell manufacturers in the world, 8 are Chinese companies.

Take Jiangsu Zhongneng Silicon, a company specializing in the production of polysilicon, as an example, the construction of its first-phase production capacity of 1,500 tons was officially started in June 2006. At that time, it produced 155 tons of polysilicon, with sales of 300 million yuan; and in June 2008, The second-phase production capacity of 1,500 tons was completed, and 1850 tons of polysilicon was produced that year, with a sales income of 3.57 billion yuan.

Lu Jinbiao told the Morning Post reporter that when they entered the industry, they did not expect such high profits. Last year, less than 2,000 tons of sales, their net profit reached more than 20 billion, which they did not expect.

He disclosed that in 2008, Jiangsu Zhongneng’s comprehensive polysilicon cost was US$67/kg, and they put into production 10,000 tons of projects in the first half of this year, the cost fell to US$46/kg in the first quarter, and was controlled at US$35/kg in the whole year of 2010. The annual plan will reach the international level of 25 US dollars / kg.

At present, more consideration to reduce costs It is clear that the polysilicon industry before 2009 is a more obvious profiteering industry. However, all this has changed with the financial crisis that began in the fourth quarter of last year. The price of polysilicon has dropped from 300-400 U.S. dollars per kilogram to 50-60 U.S. dollars per kilogram this year.

Zhao Yuwen, chairman of the Photovoltaic Branch of the China Renewable Energy Association, told the Morning Post reporter that the plunge in polysilicon prices is essentially a return to price, and the era of polysilicon profits is not normal. With the return of polysilicon prices, it also forces domestic investment in technology and cost control.

For the future whether the price of polysilicon will rise to more than 100 US dollars per kilogram, both domestic and foreign practitioners have expressed a high degree of consistency in the denial.

Eric Peeters, the head of the world's largest polysilicon production capacity Hem Lock Co., said to the Morning Post reporter that the global polysilicon price is mainly determined by the market, but according to the future rapid global production capacity expansion, especially China, wants to return to the previous giant profits era. Already unlikely. Lu Jinbiao also told the Morning Post reporter that if we look at the current domestic expansion, it is very likely that the supply will exceed supply in the next two years, and polysilicon prices are unlikely to return to more than US$100/kg. They are currently more concerned about how to reduce costs.

The Great Leap Forward of Local Governments From the west to the east, from the inland provinces to the coastal areas, dozens of cities in China are building photovoltaic industrial parks, and many places have set the goal of creating a multi-billion photovoltaic and polysilicon industrial park.

The Leshan City, Sichuan Province, which has been used as a polycrystalline silicon field, currently has 28 projects in the solar photovoltaic silicon material industry chain with a total investment of 40.9 billion yuan. Investment companies include Yongxiang, Shin Kong Silicon, Dongqi Qiban and Tuo Rixin Energy. 24.49 2.81%] (Xintianyuan), Ledian Tianwei and others. According to the local development and reform commission, as of the end of June, the city of Leshan has formed an annual output of 4,500 tons of polysilicon production capacity, ranking first in the country and is expected to expand to 7,500 tons by the end of the year.

In the "Jiangxi 2009 Key Industry Investment Project", 26 polysilicon production and slice application projects have a total investment of 32.187 billion yuan and are distributed in 15 prefectures and cities across the province.

Shaanxi Province, which originally had no photovoltaic industry, listed the photovoltaic industry as the "Project No. 1" in the province in early 2009. At present, it has eight photovoltaic industrial parks.

According to a data held by the Morning Post reporter, as of now, there are currently 22 projects with a total of 45,000 tons of polysilicon projects in production or will soon be put into production. Lu Jinbiao told the Morning Post reporter that many projects with hundreds of tons of fuel should not be opened up now. Because of the cost, other large-scale projects of enterprises will also fail to produce on schedule because of the problems of the **.

According to the Morning Post reporter, starting from July 2008, there are 35 polysilicon projects in 17 provinces across the country with 35 projects under construction or ready for construction. If these projects can all be completed on time and fully release production capacity, China's polysilicon production will reach 120,000 tons. According to statistics from China Investment Securities, as of the first half of this year, nearly 50 companies in more than 20 provinces including Sichuan, Henan, Jiangsu, and Yunnan are constructing, expanding, and planning to build polysilicon production lines with a total construction scale of over 170,000 tons.

The project is easy to approve. “Actually, all statistical data in various aspects are not particularly accurate, or there are projects, but because the funds are not in place, or the market is not good and they have not started construction, these have to first look at the actual production capacity. For our company, both planning and reality must be clearly understood.” The aforementioned Suntech person in Wuxi told the Morning Post reporter.

"No matter how much capacity will be launched, it will be directly related to local policies," said an industry source who declined to be named to the Morning Post reporter.

For local governments, there are mainly projects that comply with the basic industrial policies of the country, so that the output value can be expanded quickly, paying taxes, and pulling GDP will inevitably pass quickly. Well, such a situation with no overall layout will inevitably cause repeated construction.

The above-mentioned industry insiders who declined to be named told the Morning Post reporter that the polysilicon project implements a filing system. Compared with many large-scale industrial projects, the National Development and Reform Commission and other central ministries and commissions must approve it. It is much simpler, as long as it passes local environmental assessments, processes, and other procedures. Polysilicon is also a scarce sunrise industry, why not start it?

The current capacity of Jiangsu Zhongneng has reached 18,000 tons. Lu Jinbin told the Morning Post reporter that outside the industry, not many companies even knew that before 2009, they were only rushing to expand their production capacity.

Is the production capacity really excess?

According to the overall calculation of the planned production capacity, the entire polysilicon production capacity is undoubtedly confirmed.

According to China Electronics [0.90 5.88%] Materials Industry Association, the total planned production capacity of polysilicon is expected to exceed 100,000 tons by 2010, which will be far more than twice the global demand. The industry warned that 3 to 4 of the polysilicon projects were under construction. In the past two to three years, the entire industry had certain risks of excess investment and excess capacity.

In addition, according to the calculation data of the enterprise, Jiang You, CEO of GCL-Poly Energy (2.01 1.01%) Holdings Co., Ltd. (03800.HK), currently has more than 20 companies entering the polysilicon industry in China. If global PV installations are forecast to be installed next year, Calculated for 12 million kilowatts, the corresponding supply of polysilicon is 70,000-80,000 tons. In this case, China's polysilicon overall planning production capacity will have a partial surplus.

"But we can't just count the figures, but we must look at the actual needs of enterprises, and the actual situation of the current polysilicon manufacturers on the market." The Suntech personage said.

"Does China's polysilicon production capacity excess is indeed not understandable on a digital basis." Zhao Yuwen told the Morning Post reporter that in 2008, the domestic polysilicon production (more than 6N) was only 4,000 tons, meeting the needs of the downstream market by 1/4, and the rest were imported.

Lu Jinbiao told the Morning Post reporter that the current production capacity of their companies has 18,000 tons. Since the new 5,000-ton production line is gradually put into operation in the first half of the year, there are three to six months of capacity increase after the production. The actual output this year is expected to be 7,500 tons. Now that there are thousands of tons of output every month, it is still not able to satisfy customers' orders.

It is understood that in 2008, Jiangsu Zhongneng had signed long-term “quantitative pricing” with several major PV companies such as Wuxi Suntech and Changzhou Tianhe. The contract amount was as high as US$21.3 billion. The deposit received was There are 2.7 billion ***.

In fact, if the current classification of polysilicon production capacity is known, it can be divided into: actual output of the company, production capacity, and production capacity that has been announced but has not yet been built.

For example, it has long been known that it will become Asia’s largest LDK LDK. From its IPO on the NYSE in June 2007, it claims to have built 15,000 tons of polysilicon, but it has not yet been completed, but it was later used by Jiangsu Zhongneng. The person exceeds quickly.

Zhao Yuwen told the Morning Post reporter that projects under construction may stop production due to issues such as scale costs. The planned production capacity will also change due to market supply and demand. These are only examples of figures, but they have not reached the actual supply. They expect that the actual production capacity of polysilicon this year will be only 14,000 tons, which is actually less than demand. From this perspective, the argument for excess capacity is inaccurate.

According to a number of industry insiders interviewed by the Morning Post reporter, the so-called 100,000-ton capacity plan for the next year will, with funding, market demand, and cost issues, a considerable portion of which will be grounded.

Industry Reshuffling Opportunity Arrives Before this National Day, the State Council issued the “Suggestion on Suppressing Overcapacity in Some Industries and Repeated Construction and Guiding the Healthy Development of Industries” (hereinafter referred to as “opinions”). The industry expects that before the end of the year, a more specific, industry-specific guidance policy for the polysilicon industry will be released.

Zhao Yuwen told the Morning Post reporter that the current tendency to oversupply polysilicon does not mean that the country is beginning to suppress the new energy industry, nor does it mean that its support efforts will be weakened, but it will overall plan for the overall development of the healthy development of the industry.

“For the major industrial areas, what is the domestic situation is not the first overcapacity, chaos, and then the government to adjust the situation? This is actually a contradictory issue, the government can not get it early, nor late to sell.” The above anonymous person A reporter from the Post said.

On August 26, the executive meeting of the State Council pointed out that “polysilicon and other emerging industries are subject to repeated construction and overcapacity”. On September 21, the National Development and Reform Commission and the Ministry of Industry and Information Technology issued a questionnaire to relevant provincial and municipal authorities to enable provinces and cities to provide data on current and planned production, production capacity, technology sources, and energy consumption of local polysilicon and solar cells.

Earlier, according to the Morning Post reporter, on September 10, the Ministry of Industry and Information Technology Department of the Ministry of Industry and Information Technology held a polysilicon and photovoltaic industry cooperation development conference in Luoyang Silicon. The participating companies include LDK, Jiangsu Zhongneng, Shin Kong Silicon, Daquan PV. And other six industry first-line companies.

According to Lu Jinbiao who was present at the time, the Ministry of Industry and Information Technology had asked them when the scale of production was a matter of scale economy. There were 5,000 tons mentioned and 3,000 tons were mentioned, but even if the scale is 3,000 tons per line, the whole In the polysilicon industry, there is almost no compliance.

As for the current production capacity of more than 20 polysilicon production enterprises in China, the production scale of 200-300 tons is all around, and the 1,500 tons of single-line is already large scale, not only that, even if the forthcoming industrial policy has passed for these The approved project did not work, so the high cost forced it to stop.

It is understood that the production capacity of single-line production lines below 1,000 tons, polysilicon production costs at least 80 US dollars / kg or more, in addition to its environmental pollution is far more serious than the scale of large-scale recycling projects.

Bank has tightened polysilicon**

Lu Jinbiao predicts that "the forthcoming guidance for the industry is estimated to be mainly to refine the "Opinions" issued by the State Council at the end of September, but among these, we can now have a rough judgment."

The industry expects that, first of all on the scale, in the future, projects under a single line of 3,000 tons will no longer be examined and approved, raising the investment threshold. A single-line project with a 3,000-ton ton investment of 2 billion yuan will naturally be inaccessible to investors with no strength. Secondly, the ability to build new polysilicon projects. Consumption and technology requirements, solar grade polysilicon reduction power consumption is less than 60 kwh / kg, which means that in the future will no longer approve the modified Siemens process production of solar polysilicon projects, in the future only new batches of other energy consumption such as silane method is lower New craftsmanship.

The improved Siemens process is currently the mainstream production technology for polysilicon companies in China.

In fact, at present, the country has quietly adjusted its polysilicon financial and import and export policies. From September 1, waste polysilicon is no longer allowed to import. This is actually suppressing entry barriers for small businesses. In addition, after the polysilicon was detained on the hat of "propensity to overcapacity," banks have tightened monetary policy.