Polysilicon production is difficult to become a climate

After experiencing last year's "downturn", polysilicon makers who have been quiet for a long time will usher in a new round of resumption of production.

The rise in polysilicon prices and China’s “double-reverse” investigation of imported polysilicon is the driving force behind this round of resumption of production.

According to informed sources, polysilicon plants with a domestic scale of over 3,000 tons have planned to resume production by the end of April. Many large manufacturers including China Silicon High-Tech, Savi LDK, Sichuan Ruineng are planning to resume production. Yan Dazhong, a deputy general manager of Luoyang China Silicon High-Tech Co., Ltd. (hereinafter referred to as “China Silicon High-tech”), said that China Silicon High-Tech plans to resume some polysilicon production capacity at the end of April with a target of 6,000 tons.

China's "double-reverse" investigation of polysilicon produced in Europe, America and South Korea is considered a new opportunity for domestic polysilicon manufacturers. Domestic silicon companies believe that the investigation of imported polysilicon will help Chinese companies out of the woods.

The original preliminary ruling date of the Ministry of Commerce was announced on April 5, but was delayed until the end of June. Yan Dazhou said that the preliminary ruling was postponed to affect the polysilicon enterprise's resumption of production plan, and some small and medium-sized silicon plants had to wait for another two months.

Planning for a return

In September 2012, China Silicon High-Tech made a difficult decision, which was to stop production. The actual controller of China Silicon High-Tech is the Central Metallurgical Science and Technology Group of China. At the end of 2012, China Silicon High-Tech's production capacity reached 10,300 tons, second only to GCL-Poly's annual production capacity of 65,000 tons.

Yan Dazhou said that the reason for the suspension was because the market price was too low and the competition was too abnormal. In fact, according to the China Photovoltaic Industry Alliance, 90% of China's polysilicon companies were forced to suspend production throughout 2012.

Entering 2013, polysilicon prices began to rise, which provoked the nerves of some polysilicon companies. According to data released by the China Nonferrous Metals Industry Association, since March this year, the price of polysilicon has increased from 115,000 yuan/ton at the end of December 2012 to 142,600 yuan/ton in March 2013, an increase of 24%.

Zhai Xingxue, president and CEO of LDK, said that the rise in polysilicon prices will drive down the price of downstream. Not long ago, LDK developed a recruitment plan of 1,200 people, which is considered a precursor to the resumption of production.

Another nerve that motivates polysilicon companies to resume production as soon as possible is that China’s investigation into imported polysilicon “double-reverse” from the United States, South Korea and the European Union will be carried out in early April.

The data shows that the average manufacturing cost of polysilicon in China is nearly $10/kg higher than that of foreign manufacturers. However, by levying a higher range of anti-dumping and countervailing duty rates, this gap will shrink or even disappear. This has tempted domestic large-scale polysilicon enterprises to start planning for a resumption of production. Since March this year, China Silicon High-Tech has begun preparations for resumption of production. Yan Dazhou said that the company is putting pressure on the system, and the preheating plan will gradually resume production capacity, with an initial target of 6,000 tons. At the same time, Sichuan Ruineng, Saiwei LDK and other large polysilicon manufacturers have also planned to resume production. According to people familiar with the matter, the original plans for polysilicon plants with an annual output of 3,000 tons or more are scheduled to resume at the end of April and early May.

Sichuan Ruineng Silicon Materials Co., Ltd. (hereinafter referred to as “Sichuan Ruineng”) is also planning to resume production in April. Sichuan Ruineng was established solely by Renesola Ltd of the United Kingdom. RenesolaLtd is a listed company successfully listed on the New York Stock Exchange and the AIM version of the London Stock Exchange. It also owns the solar downstream company Zhejiang Yuhui Sunshine Energy Co., Ltd. in China. People close to Sichuan Ruineng revealed that the company also plans to resume production in April. If the first and second production lines are fully restored, it is expected to achieve 10,000 tons/year of production capacity.

Temporary stagnation

According to data from the China Photovoltaic Industry Alliance, at the end of 2010, there were 57 polysilicon enterprises with output in the country, but only three or four are still in production so far.

At present, in addition to a few large enterprises such as China Silicon High-Tech, which still do not change the original resumption plan, many small and medium-sized polysilicon manufacturers have to temporarily abandon the resumption of production plan, and wait another two months.

Yan Dazhou said that the production line needs to start a new process. It will last for half a month, and it will last for more than one month. The loss of production suspension after the start of construction will be greater than the loss of continuing production. The reason for forcing small and medium-sized enterprises to temporarily suspend production is that the preliminary results of the Chinese Ministry of Commerce’s investigation into the import of polysilicon “double-reverse”, which was originally scheduled for early April, were postponed until the end of June.

"The original plan was to have results in early April, so we are all ready to start. If the preliminary ruling is announced, the imported polysilicon will be greatly reduced due to the tax rate, and the domestic polysilicon will have a way to live." A general manager of medium-sized silicon enterprises Said.

On July 20, 2012, the Chinese Ministry of Commerce conducted an anti-dumping investigation on imported polysilicon products originating in the United States and South Korea. The investigation period was from July 1, 2011 to June 30, 2012. The survey prompted the EU, the US and South Korea to dump a large amount of polysilicon into China. A senior executive of GCL-Poly said that the price of imported polysilicon is far lower than the cost price of Chinese companies, resulting in China's polysilicon enterprises simply unable to survive.

According to data from February this year, imported polysilicon from South Korea, the United States and Germany accounted for 87.5% of China's total imports, and the average unit price of imports was 19.87 US dollars / kg, 12.57 US dollars / kg, 21.6 US dollars / kg. The cost price of domestic polysilicon enterprises is more than 30 US dollars / kg.

However, the Chinese Ministry of Commerce postponed the preliminary date to the end of June, aiming to “reverse” the preliminary ruling of the EU’s anti-dumping investigation against China’s PV downstream enterprises to be announced in June. "From the current situation, the possibility of the EU's initial ruling is very high. Once China's downstream enterprises are imposed a high tax rate, China will officially announce the preliminary results of imported polysilicon," said people familiar with the matter.

Yan Dazhou revealed that the Ministry of Commerce has already prepared for the investigation of imported polysilicon produced from the European Union, the United States and South Korea, and only announced it at an appropriate time.

"At present, June may be a better time to resume production. What we have to do now is to prepare for some preliminary preparations, wait for the preliminary results of the EU, and wait for the Chinese government's countermeasures." The general manager of the company said.

"Money" is not clear

But at least for now, domestic polysilicon companies are still facing low-cost dumping of imported polysilicon production.

According to customs data, in February of this year, China's polysilicon imports were 7,991 tons, an increase of 17.7% from the previous month and an increase of 4.9%. This is the month with the largest number of imports per month since September 2012, except for September 2012.

In terms of import unit price, the average price of polysilicon imports fell sharply to US$17.7/kg in February, down 37.1% year-on-year, which was 30.2% lower than the average price in 2012.

In February, China imported polysilicon mainly from South Korea, the United States and Germany, and three countries accounted for 87.5% of total imports. Among them, imports from South Korea were 1422 tons, accounting for 17.8% of total imports; imports from the United States were 2,860 tons, accounting for 35.8% of total imports; and German imports were 2,713 tons, accounting for 33.9% of total imports.

GCL-Poly executives believe that even if they resume production in June, it is still difficult to sell a good price. Because the dumping of foreign polysilicon now leads to the price of domestic polysilicon still lower than the cost price. "Foreign polysilicon costs between 20 and 30 US dollars, but the price of polysilicon products sold to China is less than 20 US dollars / kg. At this price, the resumption of production will only be a loss," the executive said.

At present, more than 70% of the domestic silicon supply is from GCL-Poly. The above-mentioned executives admit that GCL-Poly is still losing money despite its low cost. In 2012, GCL-Poly net loss was 3.5 billion yuan.

Yan Dazhou admits that the current situation is much worse than expected. On the one hand, the preliminary ruling on imported polysilicon was not implemented; on the other hand, the on-grid price of photovoltaic power generation was reduced.

At the beginning of this year, the National Development and Reform Commission issued a draft of the "Notice on Improving the Price Policy for Photovoltaic Power Generation" (hereinafter referred to as the "Opinion Draft"), and proposed a new implementation plan for the next-generation photovoltaic power generation price. Previously, China's photovoltaic power generation on-grid price was more than 1 yuan. The Opinion Draft distinguishes between distributed generation and large-scale ground power generation. Among them, the large-scale ground power stations are divided into four types of resource areas according to different lighting conditions, and the on-grid tariffs of 0.75~1 yuan/degree are implemented.

"This policy has reduced the enthusiasm of power station companies, and accordingly has an impact on the entire industry chain. Shipments of downstream battery and component companies may be reduced, which in turn affects the procurement of upstream silicon materials." GCL-Poly executives said.

In June, the EU will announce the preliminary results of China's solar cell products; at the same time, China will take counter-measures to announce the preliminary results of imported polysilicon.

Although this will curb the dumping of foreign polysilicon, it will also hit downstream companies. At present, the European market is still the main market for domestic downstream PV companies, still occupying nearly 70% of the market. Meng Xianyu, vice chairman of the China Renewable Energy Society, said that the current situation may be better, but the recovery is still early, if the overcapacity and on-grid tariffs are not well resolved, the industry development is still difficult.

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