FocusAsia polysilicon to slide on bloated global inventories

27 September 2012 05:40  [Source: ICIS news]

By Felicia Loo

SINGAPORE (ICIS)--Asian solar-grade polysilicon spot prices are likely to slide because of poor demand and overwhelming global inventory levels estimated at 30,000 tonnes, market players said on Thursday.

On 26 September, spot polysilicon prices were at $16-17/kg (€13-14/tonne) FOB (free on board) NE (northeast) Asia, down by 62% from around the same period last year, according to ICIS data.

The bulk of the inventories are sitting in Asia, market players said.

“Demand is so poor and the inventories are huge. There is a lot of floating material in the spot market,” said a market player.

Spot polysilicon deals were scarce in the bleak solar sector, forcing out many small to medium polysilicon producers in China out of business, they said.

A number of China-based polysilicon producers had shut their plant operations since October last year and there were no signs of these players resuming operations, they said.

Polysilicon is the solar feedstock, which is used to manufacture mono/multi-crystalline ingots, wafers, solar cells and solar panels

Just one MW (megawatt) of photovoltaic power requires seven tonnes of polysilicon material, which is traded in chunks, rods and granules.

Solar cells and modules makers in China are operating their plants at less than 50% of capacity, and the run rates may even be reduced further, they said.

Many solar module manufacturers in China are considering cuts in production, while some solar cell makers may even stop production in October, causing demand for the upstream solar polysilicon feedstock in the country to weaken, players said.

A lack of funding was a factor for the Chinese players that could not sustain their business amid a weak economy, as they were unable to apply for bank financing easily, they added.

“In the past, we could receive 100% payment after one month of delivery. But now, buyers will drag payment for about three months and even after three months, we can’t be certain of receiving the full payment,” said a Chinese polysilicon producer.

Many market participants are adopting a cautious approach after the European Commission started an anti-dumping investigation in early September on China-origin imports of solar panels and their key components – solar cells and wafers, players said.

The move by the European Commission caused the Chinese market to weaken, because Chinese solar panel makers are finding it challenging to sell their products to Europe, they said.

In China, polysilicon prices had fallen by 61% from 28 September 2011 to yuan (CNY) 125,000-130,000/tonne ($19,810-20,602/tonne) DEL (delivered) China on 26 September, ICIS data showed.

The country’s polysilicon exports were at 166 tonnes in August, down by 4% year on year, China customs data showed.

The fourth quarter will be a tough period for solar polysilicon producers because of the current supply glut in the market, players said.

In South Korea, Woongjin Polysilicon’s plans to build a new 10,000 tonne/year polysilicon plant will be delayed indefinitely, a company source had said. The company currently operates a 7,000 tonne/year polysilicon plant at Sangju in Gyeongsangbuk-do province

($1 = €0.78 / $1 = CNY6.31)

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By: Felicia Loo

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