In just one year, the polysilicon market has seen drastic changes.
Time back to the end of September a year ago, "Some Opinions on Suppressing Overcapacity in Some Industries and Duplicate Construction and Leading the Healthy Development of Industries" (hereinafter referred to as "No.38 Document"), will send polysilicon to the "overcapacity" blacklist.
One year later, polysilicon was in short supply and prices soared by 30%, paralyzing the 38th document.
According to statistics, the price of polysilicon began to rise from more than 50 US dollars/kg in May and June of this year, and it has exceeded 90 US dollars/kg. Analysts expect polysilicon prices to break $100/kg in the second half.
In fact, the questioning of miscalculations by the Ministry of Industry and Information Technology has not stopped for a year. Li Junfeng, deputy director of the Energy Development Institute of the National Development and Reform Commission and researcher Zhao Gang of the China Science and Technology Development Research Institute of the Ministry of Science and Technology yesterday continued to shell out the miscalculations of the year when he was interviewed by the “Daily Economic Newsâ€.
So, the market performance this year is to verify the "misjudgment" question, or a sudden change in supply and demand? Is overcapacity the final say for the government, or is it the market that has the final say?
Crazy polysilicon
In 2008, when the Ministry of Industry and Information Technology issued a document with excess capacity for polysilicon, the import volume was at around 70%. In 2009, there was a shortage of supply and demand for polysilicon in the world, and China’s demand for polysilicon rose sharply, three or four times in 2007.
Data show that in recent years, China's polysilicon industry has shown an explosive growth. From 2004 to 2006, all indicators of the industry scale remained at a low level. Since 2007, due to the successive production of Xincao Silicon, Jiangsu Zhongneng and Wuxi Zhongcai, the output of China's polysilicon industry has grown rapidly. In 2007, the country’s total polysilicon production reached 1,141 tons. In 2008, the country’s total polysilicon production reached 4,573 tons, an increase of 3,432 tons compared with 2007, an increase of 300.8% year-on-year.
According to customs data, the domestic polysilicon import volume in June 2010 was 3,784 tons, an increase of 208.1% year-on-year. From January to June, the total amount of domestic polysilicon imports was as high as 19.33 million tons, and last year the domestic polysilicon production was only 10,000 tons.
According to the analysis of the “Daily Economic News†by the person in charge of the “Daily Economic News†of LeTV Tianwei Silicon, at present, the global share of China’s production volume has rapidly risen from 20% in 2006 to 35% in the production of solar photovoltaic modules. China has become the largest producer in the world, and the rapid growth in the production of solar modules has pushed up prices of polysilicon products.
Under the dual influence of strong downstream demand and slow release of new upstream production capacity, the polysilicon industry has become the hottest emerging industry in the country. Many companies and many cities are scrambling to launch a silicon industry project. This phenomenon is called “crazy polysiliconâ€.
Two experts continue to bombard "misjudgment"
Under this background, in late September last year, the State Council issued the “No.38 Documentâ€, and polysilicon was found to be “overcapacity.†In 2008, China’s polysilicon production capacity was 20,000 tons, the output was about 4,000 tons, and the capacity under construction was about 80,000 tons. The production capacity has obviously been surplus.
However, many experts are still guilty about this. Li Junfeng said that the Ministry of Industry and Information Technology had been ignoring information reported by some polysilicon companies due to asymmetric information obtained, which eventually led to a false conclusion of overcapacity.
"This is a wrong judgment." Zhao Gang also told the "Daily Economic News" that the Ministry of Science and Technology has never agreed that there is a problem of overcapacity.
Zhao Gang analyzed that the ministries and commissions of the Ministry of Industry and Information Technology had listed polysilicon as an overcapacity and had problems in stages. Different conclusions were drawn at different times.
Zhao Gang said that in 2008, China's polysilicon companies concentrated investment and construction and reported the year. In 2008, China produced 5,000 tons of polysilicon, accounting for 20% of the country's total demand. The figures reported to the Ministry of Industry and Information Technology are too concentrated, resulting in the total amount exceeding the actual demand several times. "Followed by the outbreak of the financial crisis, the demand was low and the production of enterprises shrank. Therefore, it was misjudged the excess production capacity," said Zhao Gang.
Li Junfeng and Zhao Gang explained at the same time that since the price of polysilicon continued to increase for half a year, and soared to a fairly high price, the possibility of joint ventures raising prices was not significant, indicating that market demand is increasing, and new energy potential is gradually being released. From the perspective of industry, the polysilicon industry is still in its infancy. Most of the original polysilicon industry was imported from abroad. The domestic mining and development are still in a cold state. It is therefore impractical to determine excess capacity.
Zhao Gang said that from the perspective of the entire new energy market, the solar market is in its infancy and has not yet been developed sufficiently. It takes a few years to build a polysilicon plant, and it takes a few years to reach capacity requirements.
How far can the skyrocketing market go?
For the soaring of polysilicon, is it a short-term market? There is also controversy in the industry.
Li Junfeng said that after the financial crisis in 2008, the price of polysilicon has been falling to more than 50 US dollars per kilogram in the first half of this year. Demand rebounded from May and June, and the price rose to US$90/kg, almost equaling US$100/kg.
According to the analysis of the responsible person of Levin Tianwei Silicon, global solar polysilicon production in 2007 was around 27,000 tons, an increase of about 15% compared with the same period of last year, and the growth rate was much lower than the 56% increase in solar cell production.
Affected by this, the supply of polysilicon raw materials in the world is extremely tight and prices have soared. It is expected that the global polysilicon demand will reach 85,000 tons in 2010, while the current world annual production capacity is only 588,000 tons, the gap is 26,200 tons, and the demand is growing at a rate of more than 30% a year.
The current shortage of petrochemical energy resources and strong support for the solar energy industry in various countries will further increase the global demand for polysilicon.
According to the “Daily Economic Newsâ€, the US Department of Energy estimates that the cumulative installed capacity of solar cells in 2015 will be at least 18,000 MW, and that for 1 MW of polysilicon will be 12 tons, and a total of 216,000 tons of polysilicon will be needed.
Polysilicon has again triggered the controversy over who has "overcapacity." The relevant person pointed out that for the “overcapacity†of the auto industry, due to the large influence of the industry, the relevant departments must make judgments based on mastery of accurate data. Even if "overcapacity" exists, the way to solve this problem should be more of a market, not an administrative directive.