Report on Chinese Polysilicon Industry: 2009-2010

33 Report on Chinese Polysilicon Industry: 2009 2010

Reportlinker.com announces that a new market research report is available in its catalogue: Chinese Polysilicon Industry, 2009-2010.

PVcells only take up a small share in the global power field, but theirimportance cannot be ignored. At present, polysilicon andmonocrystalline silicon dominate the market.

Monocrystallinesilicon made from silicon ingot scraps can be used for solar cells,because solar cells do not require the ultra purity like silicon wafersfor semiconductor devices. Currently, the consumption of thesemiconductor industry is about 2/3 of the polysilicon output. The left1/3 ofpolysilicon output belongs to the consumption of solar cells.

Thereare several professional manufacturers of polysilicon andmonocrystalline silicon wafers in the world. Their products aresupplied to the semiconductor industry and the PV cell industry. As thesemiconductor industry and the PV cell industry are both value-addedindustries, they do not need too much transportation cost.

Whenthese companies have surplus productivities or short productivities, aswell as they expand their productivities or close devices in a certainregion, competitors in other regions will usually have to reconsidertheir decisions.

Polysilicon is used as raw materials for twoindustries. First, it can be used for the semiconductor industry tomake monocrystalline silicon wafers. Monocrystalline silicon wafers aremade as substrates for semiconductor silicon chips.

Therefore,silicon materials must meet the strict requirements of purity andadulteration standard. Second, polysilicon is used for the PV industryto make solar cell panels. The industry purchases non-special materialseliminated from the semiconductor industry.

The polysiliconprices maintained rising between 2006 and 2008, among which the highestprice was over four times the cost. A great number of investors wereattracted to invest in this industry. In recent years, the polysiliconindustry has been a popular investment industry among many new energyindustries.

Many Chinese local governments made it the importantinvestment-attracting field to draw polysilicon enterprises, regardedas polysilicon bases. It is regarded that the main polysilicon basesinclude Sichuan Leshan, Chongqing, Wuhan and Luoyang in Central andWest China, and Xuzhou, Yangzhou and Lianyungang in East China.

Jiangsuplans to raise the polysilicon productivity to 30,000 tons in 2011,which is six times the constructed productivity of China in 2008 (5,000tons).

It is estimated that Chinese domestic polysilicon productivity will exceed 60,000 tons in 2011 and exceed 100,000 tons in 2012.

Atpresent, the total productivity of the global top seven polysiliconenterprises is 120,000 tons. The conservative estimation of the globalpolysilicon productivity in 2012 is 240,000 tons including Chineseproductivity that will be operated in 2009 (nearly 20,000 tons) andChinese scheduled productivity (100,000 tons at present).

Theglobal output of cell modules was 5.5 GW in 2008. It is estimated thatthe output in 2012 will reach 12 GW. As productivity of current cellmodules at 1/6 W/g, 72,000 tons of polysilicon will be demanded by2012. Polysilicon overcapacity still exists in the world.

In 2008, over 10 large polysilicon projects were rebuilt in China.Many declared they were the largest in China.

Polysiliconprojects demand for a large amount of investment. Generally, apolysilicon project with the productivity of 1,000 tons needs about RMB1 billion ($143 million). It is estimated that the accumulativeinvestment on Chinese polysilicon projects will exceed $14 billion inrecent years.

At present, the production cost of main Chinesepolysilicon enterprises is between 40 USD/kilo and 70 USD/kilo. Theproduction cost of those enterprises without scaled production orclosed-loop productionis about $100/kilo. The global financial crisishas caused failures of some new projects as they had low return ratesof assets.

However, some strong enterprises have made full useof the opportunity to expand their production. It is estimated that themarket concentration of Chinese polysilicon industry will be improved.

Asthe price of Chinese polysilicon was $450/kilo in 2008, enterprisescould achieve a sudden huge profit of over 300 percent. The investmentreturn period of polysilicon projects is about three to four years. Atpresent, the polysilicon price is between $70/kilo and $80/kilo.

Therefore,manufacturing cost of Chinese enterprises equipped with the besttechnologies is also over $3/kilo. The profits have been greatlyreduced. However, enterprises can still gain considerable returns ifthey improve technologies and control costs. Those enterprises havinglong-term orders are not affected by the cash markets greatly. In thelong run, the industry won’t gain sudden huge profits.

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