GTM Research publishes the Polysilicon 2012-2016: Supply, Demand & Implications for the Global PV Industry report, a comprehensive analysis on global polysilicon markets, including the technologies, business strategies and economic roadmap for the industry. To learn more, click here.
In 2011, the solar industry saw global oversupply drive PV prices to record lows, with crystalline silicon (c-Si) module prices falling from $1.80 per watt at the start of 2011 to $0.90 per watt by year’s end.
High purity silicon (polysilicon), the key feedstock for c-Si modules, played only a minor role in this price collapse, as over 80 percent of polysilicon is sold via long-term contracts, and the pricing on these contracts moved little for most of 2011. However, oversupply in the polysilicon market pushed the spot price of silicon down from $80 per kilogram in late March 2011 to under $30 per kilogram in December, representing more than a 60 percent drop. This substantially lower spot price gave silicon customers (i.e., wafer manufacturers) the leverage to renegotiate contract pricing downward, and this will result in much lower realized silicon average selling prices (ASPs) in 2012.
Lower silicon prices in 2012 will likely lead to even lower c-Si module prices. Without any other improvements, a $30-per-kilogram drop in silicon price would save module manufacturers approximately $0.20 per watt, which could bring module prices below $0.70 per watt.
For most of the past decade, polysilicon manufacturing was a near oligopoly, and growth in solar-end market demand allowed the incumbents to earn healthy and consistent EBITDA margins greater than 40 percent. In 2008, a shortage of polysilicon pushed prices to outrageously high levels (greater than $400 per kilogram in the spot market), and with those high prices came eye-popping 70 percent margins that enticed existing players as well as new entrants to embark on plant construction/expansion plans. These massive new plants and expansions made their presence felt in 2011, with a supply/demand imbalance pushing silicon prices to record-low levels, below even the cash costs of many manufacturers.