On May 19, the latest data released by the Silicon Industry Branch of China Nonferrous Metals Industry Association showed that the domestic single crystal compound feed price range for the week was 174,000-200,000 yuan/ton, and the average transaction price was 194,400 yuan/ton; The price range of dense materials is between 172,000 and 198,000 yuan/ton, and the average transaction price is 190,000 yuan/ton.
This is the 16th price increase for silicon materials since the end of 2020. Since the beginning of 2021, the price of polysilicon has been rising all the way and has remained at a high level. It has exceeded expectations and has exceeded the 200 yuan mark, which means that the price of polysilicon has returned to the high level of 10 years ago.
Downstream companies are difficult to make a profit
“At present, almost none of the downstream companies are profitable. Everyone is reducing production. Our current strategy is that we would rather cut production and stop production than resolutely do not make’blood loss’ orders. Stop the old production capacity first, and expand the new production capacity. This reduces costs.” At the Polysilicon Industry Development Forum in 2021, Canadian Solar Power Group Co., Ltd. Vice President Xiong Haibo said frankly that at present, the cost of modules and other downstream links in the photovoltaic industry has increased significantly. “It’s not just the price of silicon materials, but also the price of photovoltaic glass and packaging materials. Coupled with the impact of exchange rates and skyrocketing shipping prices, these factors have an impact on the downstream gross profit of more than 6 cents per watt.”
“As far as the profit distribution of the entire photovoltaic industry is concerned, it is actually closer to a’smiling curve.’ One end is the production of silicon materials with a relatively high threshold, and the other end is the terminal project development. The manufacturing links of cells and modules are at the bottom of the curve. In the case of industry fluctuations, the impact will be greater.” Zhang Jinjian, senior vice president of Akcome Technology, pointed out that looking at the annual reports of listed photovoltaic companies in 2020, many module manufacturers that rely solely on external supply chains have experienced serious problems in the second half of 2020. Profits are upside down. “Now companies with silicon resources can be very willful, and many single cell and component manufacturers are basically unable to parry.”
Mismatch between supply and demand in the industry chain
In response to the continuous increase in the price of silicon materials in this round, the Silicon Industry Branch analyzed and pointed out that the fundamental reason was that the release of capacity expansion in the intermediate links of the photovoltaic industry chain was relatively advanced and excessive. “Polysilicon production is a high-input, high-tech, and high-capacity industry, but it has been on the margins of profit and loss for a long time. Therefore, the capital for expansion of production enterprises is limited, and external capital is rarely involved. In the middle of the silicon wafer, Since the cell segment has maintained a relatively high level of profitability for many years, the company’s own expansion capacity is sufficient, and a large amount of external capital has also been attracted. However, due to information asymmetry, the upstream silicon material expansion scale data held by downstream companies is much larger than that In reality, the scale and speed of expansion of the intermediate links far exceeded expectations.”
“For the downstream links, the domestic polysilicon output can match up to about 160 GW. But how large is the scale from pulling crystals to cells to modules? In the initial investment process of midstream and downstream companies, they have carefully considered whether the supply of raw materials Can it be matched?” According to Liu Fu, vice president of GCL-Poly (Suzhou) New Energy Co., Ltd., the rise in silicon material prices is largely driven by downstream efforts.
According to the forecast of the Silicon Industry Branch, the total supply of silicon materials this year is about 570,000 to 580,000 tons (including imports), which is enough to guarantee the terminal global demand for new installed capacity of 160 GW, and the intermediate link is expected to exceed 300 GW. Production capacity has caused an obvious mismatch between supply and demand in all links of the industrial chain.
Hope to restore rationality
As Xinjiang Daquan, Oriental Hope, GCL-Poly, Xinte Energy and other major domestic polysilicon production companies have successively launched new production capacity, some analysts pointed out that polysilicon prices are expected to return to a rational range in the second half of next year.
Liu Fu revealed that GCL-Poly will continue to increase the production of granular silicon. In Xuzhou, Leshan and other places, there have been corresponding expansion plans, and about 300,000 tons of silicon material projects are also being deployed in Inner Mongolia. “In the next 1-3 years, the planned production scale of granular silicon will be around 360,000-400,000 tons. Whether to expand production in the future, and how large-scale it is depends on market development.” Liu Fu also emphasized that the company’s new expansion of silicon Material production capacity will all be concentrated in the field of granular silicon.
“The rise in the price of silicon materials is a short-term phenomenon. We have counted the production capacity of silicon materials, and the next 3-5 years can meet the needs of downstream production.” Shang Yaohua, general manager of public affairs of Longi Green Energy Technology Co., Ltd. believes that upstream and downstream There can be no perfect synergy in production capacity. “In any link, investors will come in as long as they see relatively high profits. Competition is still the mainstream of the next photovoltaic industry chain.”
“At the low prices from May to June last year, the entire silicon material market actually lost money. The prices at that time did not reflect the true value of the industry. The current price fluctuations are also market behavior.” Liu Fu pointed out that in the short term, This process does waste a certain amount of social resources, but from a long-term perspective, companies can work hard in this process and focus on future development.