Solarbuzz: Polysilicon oversupply to continue; Tier 1 production will be greater than PV industry requires in 2012

Tier 1 makers PV polysilicon supply/demand scenario
Tier 1 makers PV polysilicon supply/demand scenario

Despite the fact that most leading polysilicon producers have been operating at a loss, polysilicon capacity is expected to grow 22% in 2012 and a further 18% in 2013, according to the NPD Solarbuzz Q3’12 Polysilicon and Wafer Supply Chain Quarterly Report.

Solarbuzz (Santa Clara, Calif.) forecasts average industry-wide polysilicon prices for photovoltaic (PV) applications to drop 52% in 2012, while plant utilization is expected to decline from 77% in 2011 to 63%.


70% of total polysilicon capacity is held by a small number of tier 1 producers

“The last thing the polysilicon industry needs right now is more capacity. But some of the new plants that were started two to three years ago are proving hard to abandon,” stated Charles Annis, Vice President at NPD Solarbuzz.

“In addition, some producers are adding capacity in an attempt to lower their costs through economies of scale. Some are improving capacity productivity, while others are upgrading manufacturing technology, such as adopting hydrochlorination, to reduce power consumption and increase scale.”

Total polysilicon capacity will exceed 385,000 tons in 2012, of which 70% is held by a small number of tier 1 producers. In fact, these tier 1 providers alone are forecast to satisfy all polysilicon demand under the NPD Solarbuzz most-likely end-market scenario for the next few years.


Numerous industry exits expected within the next 18 months

Unless end-market demand provides a strong upside surprise to expected polysilicon requirements, many of the 57 tier 2 and 3 producers are likely to exit the industry within the next 18 months, Solarbuzz notes. Indeed, even a few of the less-experienced tier 1 makers may not survive over the next couple of years.

Average polysilicon prices are forecast to start to stabilize in 2013 at around USD 21/kg, as the remaining players rationalize utilization rates in line with end-market requirements while ensuring that selling prices remain above their cash costs.


Chinese anti-dumping and countervailing duties may hurt not only foreign but many Chinese PV producers

“If China’s Ministry of Commerce decides to impose anti-dumping and countervailing duties on polysilicon imports, prices are likely to increase,” added Annis.

“However, this will only help a limited number of local Chinese polysilicon producers. It will hurt not only foreign producers but many Chinese wafer, cell, and module makers. Also, it will not help to resolve the polysilicon oversupply issue and could restrict end-market growth due to higher prices.”


Tier 1 polysilicon producers continue to plan for longer term PV involvement

In addition to import duties, any increase in polysilicon prices will likely be limited by first tier supply sufficiency and end market demand for the next couple of years. However, tier 1 polysilicon producers continue to plan for longer term PV involvement, where low cost structures, economies of scale, and continuously improving productivity are expected to yield benefits as shipment volumes grow.

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2012-10-02 | Courtesy: NPD Solarbuzz | © Heindl Server GmbH

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