Beware of the blind expansion of small and medium-sized polysilicon enterprises

Thanks to the growth in demand for solar products in countries such as Spain and Germany, the price of polysilicon, which suffered from overcapacity and prices collapsed last year, has returned to the upward trend. The products of major polysilicon manufacturers such as LDK LDK, LeTian Tianwei and Xinguang Silicon were obviously in short supply. Under such market conditions, it is necessary to guard against the blind expansion of small and medium-sized polysilicon enterprises.

Customs data show that in June 2010, China imported 3,784 tons of polysilicon, an increase of 208.1%. From January to June, the total amount of imported polysilicon in China totaled as high as 19,300 tons, which was much larger than the annual domestic polysilicon output of about 10,000 tons. Many people in the industry expect that the price of polysilicon will soon rise to a new high of US$100/kg, and it is expected that the market demand for polysilicon will continue to increase substantially.

This is in stark contrast to the situation in which the entire industry mourned in the second half of last year and the “overcapacity theory” spread widely. At that time, in order to reverse the problem of sluggish prices and insufficient demand in the polysilicon industry, the ten ministries and commissions including the National Development and Reform Commission and the Ministry of Industry and Information Technology even formulated the “Several Opinions on Suppressing Overcapacity and Repeated Construction in Selected Industries and Leading the Healthy Development of Industries” to strictly control energy shortages and electricity prices. New polysilicon projects in higher regions will not approve or record polysilicon projects that lack comprehensive utilization and environmental protection, and the scale of new polysilicon projects must exceed 3,000 tons/year. A group of companies planning to engage in the polysilicon industry were rejected, and a number of small and medium-sized enterprises were forced to shut down under multiple pressures.

Nowadays, with the shortage of polysilicon and rising prices, are those SMEs that have closed down to come back like steel mills? It is understood that in the peak period of the polysilicon industry in 2008, domestic polysilicon SMEs generally have an annual production capacity of 300 tons to 400 tons, and the production cost is about 50 US dollars/kg. The current price of polysilicon has been very attractive to these companies, and these companies have the advantage of a small boat.

From the industrial policy point of view, due to the lack of supply of polysilicon, the attitude of the relevant ministries has changed. According to reports, the Ministry of Industry and Information Technology is brewing the “Guidelines for the Development of Polysilicon Industry” and has adjusted the terms of the polysilicon industry's entry thresholds, including “capacity scale greater than 3,000 tons/year, and reduction power consumption less than 60 kWh/kg”. And with more non-rigid conditions.

However, Great Wall Securities analyst Zhang Lin believes that "this situation will not happen." The reason is that compared with the steel industry, the technology threshold of the polysilicon industry is even higher. In addition, the construction period of the entire polysilicon production line is more than one and a half years. These are what ordinary small businesses and small capital can't do.