Abstract With the release of the third-quarter financial reports from most domestic photovoltaic (PV) companies in November, a clear turnaround in China’s polysilicon industry has become evident. For instance, GCL-Poly sold approximately 41.18 million tons of polysilicon during the quarter, marking a year-on-year increase of 511.6%. Daxin Energy reported a 40% rise in net revenue compared to the same period last year, reaching $29.6 million. TBEA also highlighted in its quarterly report that with the completion of a new production line, its polysilicon production costs dropped to $15 per kg, while market prices have climbed above $18 per kg, signaling an expected improvement in profitability for the company.
Supply and Demand Balance is Gradually Recovering
Polysilicon serves as a key raw material in the photovoltaic supply chain, sitting at the upstream end, with downstream sectors including silicon wafers, solar cells, and modules.
The recent recovery in demand for PV products, along with the imposition of anti-dumping and countervailing duties on Chinese polysilicon imports by the U.S. and South Korea, has helped restore balance in the polysilicon market. As a result, only the most efficient and competitive companies have managed to stay in the game. Industry insiders note that current polysilicon supply is tight, with many firms having been weeded out due to high costs or inefficiencies. Prices have risen slightly from $18/kg to $19/kg, with expectations of further increases to around $22/kg next year.
According to the latest data from the China Nonferrous Metals Industry Association Silicon Branch, ten polysilicon producers announced resumption of operations in the third quarter, including China Silicon High-Tech, CSG A, and Shaanxi Tianhong. Meanwhile, companies like TBEA, Sichuan Ruineng, and Kunming Yeyan are operating at about 50% capacity, while Asia Silicon is running at full production.
Data from the China Industrial Insight Network shows that domestic polysilicon output in Q3 2013 reached 21,000 tons, up 14.3% from the previous quarter. Jiangsu Zhongneng alone accounted for 63% of total domestic production. Imports in the same period totaled about 18,000 tons, bringing total supply to 39,000 tons. Meanwhile, crystalline silicon cell output was approximately 65,000 tons, indicating a roughly balanced supply and demand situation in the polysilicon market.
However, only a handful of companies remain truly competitive. Huang Wei, an analyst at Minsheng Securities, stated, “The polysilicon industry has undergone significant consolidation. Only a few players, such as GCL-Poly, TBEA, and New Energy, are likely to survive in the long term.â€
Each Company Finds Its Own Way to Survive
The current reshuffling in the polysilicon industry reflects the volatile nature of the market. In the early 2000s, the industry saw rapid expansion, driven by the booming PV sector. This led to a surge in polysilicon prices, which soared from tens of dollars per kilogram to over $400/kg in 2007. At that time, the mantra was “carrying silicon as the king,†with companies racing to secure raw materials. This resulted in over 30-40 polysilicon producers within just a couple of years.
But the market turned sharply in 2008. Due to weak demand from downstream PV manufacturers, polysilicon prices plummeted back to around $40/kg. Many companies that had entered the market without cost advantages were forced to exit. One notable example was Yingli Green Energy, which wrote down nearly 2.3 billion yuan in value from its subsidiary, Jiusix Silicon Industry, in 2012. The company cited the impact of the global financial crisis and concerns over future profitability.
Interestingly, Yingli’s decision to divest from polysilicon proved wise in the long run. Analysts suggest that vertical integration isn’t always beneficial, and specialization can be more efficient. While the impairment had a short-term negative impact, it ultimately allowed Yingli to focus on core competencies.
Recent results show that Yingli’s performance has improved significantly. Its third-quarter report revealed a 68% increase in revenue to $596 million, largely due to stronger component sales and reduced operational costs. The company’s net loss for the quarter dropped from $162 million to $38.5 million, showing signs of recovery.
Today, only those with strong cost structures, technological expertise, and market presence can thrive in the polysilicon industry. Companies like Daquan, TBEA, and GCL-Poly have emerged as leaders. Both TBEA and Big New Energy are leveraging low electricity prices, a critical factor given that energy costs make up 30%-50% of total production expenses. They have shifted operations to western regions, particularly Xinjiang, where energy is cheaper.
As the leading player in China’s polysilicon sector, GCL-Poly not only benefits from lower energy costs but also enjoys a significant scale advantage, with an annual production capacity of 65,000 tons. Its mature technology and strong market position further reinforce its competitiveness in the industry.
Supply and Demand Balance is Gradually Recovering
Polysilicon serves as a key raw material in the photovoltaic supply chain, sitting at the upstream end, with downstream sectors including silicon wafers, solar cells, and modules.
The recent recovery in demand for PV products, along with the imposition of anti-dumping and countervailing duties on Chinese polysilicon imports by the U.S. and South Korea, has helped restore balance in the polysilicon market. As a result, only the most efficient and competitive companies have managed to stay in the game. Industry insiders note that current polysilicon supply is tight, with many firms having been weeded out due to high costs or inefficiencies. Prices have risen slightly from $18/kg to $19/kg, with expectations of further increases to around $22/kg next year.
According to the latest data from the China Nonferrous Metals Industry Association Silicon Branch, ten polysilicon producers announced resumption of operations in the third quarter, including China Silicon High-Tech, CSG A, and Shaanxi Tianhong. Meanwhile, companies like TBEA, Sichuan Ruineng, and Kunming Yeyan are operating at about 50% capacity, while Asia Silicon is running at full production.
Data from the China Industrial Insight Network shows that domestic polysilicon output in Q3 2013 reached 21,000 tons, up 14.3% from the previous quarter. Jiangsu Zhongneng alone accounted for 63% of total domestic production. Imports in the same period totaled about 18,000 tons, bringing total supply to 39,000 tons. Meanwhile, crystalline silicon cell output was approximately 65,000 tons, indicating a roughly balanced supply and demand situation in the polysilicon market.
However, only a handful of companies remain truly competitive. Huang Wei, an analyst at Minsheng Securities, stated, “The polysilicon industry has undergone significant consolidation. Only a few players, such as GCL-Poly, TBEA, and New Energy, are likely to survive in the long term.â€
Each Company Finds Its Own Way to Survive
The current reshuffling in the polysilicon industry reflects the volatile nature of the market. In the early 2000s, the industry saw rapid expansion, driven by the booming PV sector. This led to a surge in polysilicon prices, which soared from tens of dollars per kilogram to over $400/kg in 2007. At that time, the mantra was “carrying silicon as the king,†with companies racing to secure raw materials. This resulted in over 30-40 polysilicon producers within just a couple of years.
But the market turned sharply in 2008. Due to weak demand from downstream PV manufacturers, polysilicon prices plummeted back to around $40/kg. Many companies that had entered the market without cost advantages were forced to exit. One notable example was Yingli Green Energy, which wrote down nearly 2.3 billion yuan in value from its subsidiary, Jiusix Silicon Industry, in 2012. The company cited the impact of the global financial crisis and concerns over future profitability.
Interestingly, Yingli’s decision to divest from polysilicon proved wise in the long run. Analysts suggest that vertical integration isn’t always beneficial, and specialization can be more efficient. While the impairment had a short-term negative impact, it ultimately allowed Yingli to focus on core competencies.
Recent results show that Yingli’s performance has improved significantly. Its third-quarter report revealed a 68% increase in revenue to $596 million, largely due to stronger component sales and reduced operational costs. The company’s net loss for the quarter dropped from $162 million to $38.5 million, showing signs of recovery.
Today, only those with strong cost structures, technological expertise, and market presence can thrive in the polysilicon industry. Companies like Daquan, TBEA, and GCL-Poly have emerged as leaders. Both TBEA and Big New Energy are leveraging low electricity prices, a critical factor given that energy costs make up 30%-50% of total production expenses. They have shifted operations to western regions, particularly Xinjiang, where energy is cheaper.
As the leading player in China’s polysilicon sector, GCL-Poly not only benefits from lower energy costs but also enjoys a significant scale advantage, with an annual production capacity of 65,000 tons. Its mature technology and strong market position further reinforce its competitiveness in the industry.
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