09 May 2013 04:28 [Source: ICIS news]
By Felicia Loo
SINGAPORE (ICIS)--Asia’s polysilicon prices are getting depressed by weakening downstream wafer values and falling demand for the solar feedstock, market participants said on Thursday.
Spot polysilicon prices declined by $0.50-1.00/kg to $14.50-17.00/kg (€11.02-11.40/kg) FOB (free on board) NE (northeast) Asia in the week ended 8 May, according to ICIS.
Offers dropped to $15.50-17.00/kg FOB NE Asia from $16.50-18.00/kg FOB NE Asia previously, market participants said.
Polysilicon is the solar feedstock used to make solar wafers, ingots, cells and modules. It is typically traded in chunks, granules and rods.
“Prices [of polysilicon] are on a decrease because demand is no good,” said one trader.
Some photovoltaic (PV) makers in China were offloading excessive polysilicon inventories, causing polysilicon offers to slide amid a burgeoning supply of solar wafer in the country, market participants said.
The glut in the solar wafer market saw prices tumbling even in Taiwan, they added.
Chinese wafer prices were at around 80 cents per piece or even lower, while wafers from Taiwan were at about 90 cents per piece, according to market sources.
“The financial situation of some PV companies [in China] is weak. They can’t borrow from the banks in China. Reselling [polysilicon] is a way to get cash,” said one participant, referring to the dire situation of some wafer makers in China.
To raise cash, some PV companies had to put forth offers that were below market levels. It is getting increasingly difficult to borrow funds from the Chinese banks in the local solar sector, market participants said.
“Some companies can’t even open LC [letter of credit],” said one participant.
The Chinese wafer makers had earlier stockpiled solar polysilicon on expectations that China will impose penalty tariffs on solar imports, market participants said.
This led to the current oversupply as solar product exports to the EU ebbs amid the EU’s own antidumping investigations on Chinese solar imports to the region. Policies in China and EU on polysilicon trades are expected to firm up by early June, market participants said.
The initial euphoria created by the possibility of anti-dumping duties (ADDs) being slapped on China’s polysilicon imports – which will mean higher costs of imports and thus a booster to higher demand for locally-produced polysilicon – died down, casting an air of uncertainty on the market, they said.
Earlier this year, there was a rush in spot buying in China in anticipation of the ADDs to be rolled out in March, and then later to April but there was no official schedule on when the trade policy announcement will be made, participants said.
Chinese polysilicon prices fell by yuan (CNY) 1,000-3,000/tonne ($163-489/tonne) in the week ended 8 May 2013 to CNY119,000-125,000/tonne DEL (delivered) China, ICIS data showed.
Overall, the solar sector is still weak as reflected in the financial results of the market players.
Suntech Power Holdings’ 2012 revenue fell by 48% to $1.63bn, with shipments of PV products at about 1.8GW, based on preliminary data. Its gross margin for the full year 2012 was approximately -1.4%. In the fourth quarter of 2012, the company generated about $358m in revenue, with gross margin at 0.4%.
Germany’s Wacker Chemie reported an 87.8% decline in its first-quarter net profit to €5.1m, with its polysilicon business posting markedly lower sales and earnings. Its polysilicon business generated €235.4m in sales in the first three months of the year, representing a 36% year-on-year decline, with earnings before interest, tax, depreciation and amortisation (EBITDA) falling by 65% to €52.5m.
According to Wacker, solar-silicon prices in the first three months of 2013 were substantially below their prior-year levels. For silicon wafers, average prices were 7% below the prices in Q1 2012, the company said in the statement. For the whole of 2013, Wacker expects to generate the same sales of €4.63bn recorded in 2012, with EBITDA expected to fall short of the previous year’s level of €787m.
As the industry continues to wait for the government legislation on the solar sector, trading becomes largely subdued and the volumes of spot transactions remain small, market participants said.
However, some market players said the prices of polysilicon are not expected to fall dramatically.
Since late 2008, polysilicon prices have plummeted from $300/kg registered during the boom years of 2007-2008, according to ICIS.
“There is not much room for a further decline in polysilicon prices so the fall in prices has been gradual,” one player said.
($1 = €0.76 / $1 = CNY6.14)
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