For the polysilicon market , happy times are always short-lived. In the last month of the third quarter of 2011, polysilicon, which had strong market recovery expectations and good price increases, once again fell into a market downturn. In the same month, the spot price of polysilicon market broke through the high point of 110 US dollars per kilogram at the beginning of the year, and finally fell to the vicinity of 45 US dollars after half a year of ups and downs, which is close to the historical low of 40 US dollars in September 2009. What followed was that only a short period of National Day holiday, the polysilicon market, which continued to slump, was once again hit hard by the news. Recently, the European and American polysilicon manufacturers, which have been relatively firm in price control, have exposed that the new long-term contract minimum offer in 2012 has reached 40 US dollars per kilogram, and even has the opportunity to reach the price of 35 US dollars per kilogram, compared with the current 50. The average contract price of the US dollar will be a large discount. This has led to a dilemma in the majority of domestic polysilicon manufacturers whose cost competition was not dominant. One box is the price of the mid-stream demand market that continues to slump, and the other is the price containment of low-cost competition from international manufacturers. According to customs data, China imported 6,473 tons of polysilicon in August 2011, setting a record high of 6,153 tons since November 2010. In the case that a large amount of polysilicon flows into the Chinese market and the price is lower than domestic, the domestic market price is once again pulled down. At the same time, the reporter learned that the domestic PV industry is still facing a large inventory digestive pressure. Among them, the mid-stream and downstream wafer and component enterprises directly affected by the decline in the terminal PV market in Europe and the United States have generally suffered losses in the third quarter. In the fourth quarter, they will likely reduce production or even stop production. As a result, upstream polysilicon orders are sold at a lower price. The probability of loss is large, which makes the price of polysilicon in the fourth quarter likely to worsen. It is worth noting that the demand in the terminal market will continue to be sluggish. A number of industry players said that although the European market settled a more active PV subsidy policy in early June, the domestic market subsequently launched support policies. However, due to the deep impact of the European and American debt crisis, the polysilicon market in the early third quarter still rebounded slightly. In the future, expectations may continue to be bearish. Under multiple factors, polysilicon prices will fall to historical lows. As a result, upstream polysilicon enterprises will face a rational return to profit, and in order to ensure stable profits, they can only reduce costs through technological transformation and enhance market competitiveness. Spot price may continue to fall From the trend of polysilicon prices this year, the polysilicon market once showed a strong recovery in the first quarter. According to the reporter's investigation at the time (for details, see the 19th edition of "Phosphorus Fluctuation Survey: Short-term Yangyang Long-term Yin Yin" on February 26, 2011), the downstream market actually has the illusion. Without the support of real demand, the price will inevitably be within six months. A callback appears. This pre-judgment quickly became a reality in the second quarter. In the case that the downstream demand market is not clear, the PV industry, including upstream polysilicon, experienced different levels of price declines at that time. By the end of June and early July, due to the landing of the German PV subsidy policy in the major European markets, the original plan to cut subsidies was finally postponed, and the domestic photovoltaic power generation support policies were introduced, the domestic polysilicon market was once again warming up. However, due to the fact that the actual demand of the terminal market has not changed much and continues to shrink, the market price of the European debt crisis and the world economy has finally fallen back in September. According to the materials provided by the China Silicon Industry Association, after entering September, domestic polysilicon prices are still showing no signs of warming. The mainstream price was mainly maintained at RMB 350,000-400,000/ton, which was further down by 8.5% compared with August. The continued low price of the products made the manufacturers feel bitter and the pessimistic atmosphere of the whole industry during the year. There are two main reasons why prices have continued to fall during the month. First, the price of downstream battery sheets continued to fall. According to the PVNEWS quotation of the foreign authoritative photovoltaic organization, the price reduction of international silicon wafers and polycrystalline silicon cells reached 7.7% and 4.8% respectively in September. The rapid increase in downstream production and the lack of European installed capacity have led to the overall weakness of the downstream market. Due to the linkage effect caused by the decline of the battery, polysilicon is inevitably dragged down. On the other hand, it is the low price impact of foreign polysilicon spot. It is said that due to the fact that many PV companies in Europe have successively reduced production or even stopped production due to the deterioration of the overall environment, the amount of polysilicon flowing into the Chinese market has increased significantly. The impact of low-cost polysilicon abroad on the local market has become more apparent. Some polysilicon manufacturers have reported that although polysilicon can basically be sold at reasonable prices, because the current price is too low, some low-cost small manufacturers are reluctant to continue to sell cheaply. Therefore, the choice of discontinued maintenance and other methods also causes low foreign countries. The price of the polysilicon market has risen, which has pushed the market price down. More importantly, the current global PV market is still in an oversupply situation, and the market will focus on digesting inventories. Previous data showed that the inventory of battery chips in the first half of the year has reached 11GW. This has led to a 30% drop in battery component prices over the past three months. According to the latest statistics from the authority solarbuzz, the demand in the European market this year has decreased by 20% compared with the same period last year. If domestic manufacturers are shipped at the beginning of the year, it is expected to exceed the terminal market demand of 4.4GW. The agency also said that 2012 will be a challenging year, with total battery capacity increasing by 50% from 2011, while demand growth in the end market is currently expected to be less than 25%. If the output cannot be effectively controlled, component stocks may surge to 22 GW by the end of next year. The global solar market will continue to bear price pressures in 2012. It is not difficult to understand that the market is still holding a wait-and-see attitude for the new long-term contract of $40 in 2012 given by the international polysilicon giant. In their view, the demand for terminals in the future is difficult to predict. The photovoltaic industry chain, including silicon wafers, batteries, and modules, are facing oversupply problems and cutting production, or even discontinuing production. In the future, polysilicon prices will certainly face greater challenges. However, some institutions believe that the demand in the fourth quarter is better than that in the third quarter, mainly because it will face the problem of subsidies in 2012, and the demand is forced to appear in advance to catch up with the relatively better subsidies in 2011. At the same time, however, downstream terminal industry insiders also believe that demand will increase, but it will not increase sharply like in the past. Therefore, the oversupply of the solar photovoltaic industry chain is still difficult to get rid of the current situation, and the global inventory pressure problem is the same. exist. The most important bargaining price in the fourth quarter is still the price trend of polysilicon contracts, because it is related to the manufacturing costs of silicon wafers and battery factories. Cost control will become a key market supply and demand in the short-term is difficult to reverse, so that manufacturers in the photovoltaic industry are also facing different dilemmas. Silicon wafers and component suppliers in the middle and lower reaches of the industry have become the first to bear the brunt. Up to now, most enterprises have faced continuous losses in the second quarter, and some small and medium-sized enterprises have experienced production cuts or even stopped production. According to previous statistics of relevant brokerage institutions, in the first half of this year, the average gross profit margin of the domestic PV industry declined. Among them, the gross profit of battery chips and components decreased by 5 percentage points year-on-year, and the gross profit of polysilicon and industrial chain integrated enterprises decreased by 0.8 percentage points. Photovoltaic companies such as Suntech, Jingao, China Light and Power, and LDK, which are listed in the US, suffered losses in the second quarter. Since the third quarter, battery components have continued to fall. For most companies, it is difficult to have a living space, and corporate losses are becoming more and more serious. Although many PV manufacturers are willing to pay for the difficulties in order to ensure the flow of funds, if this is the case, As the market continues, nearly half of the companies will face the fate of being forced to suspend production. At present, many professional organizations including Solarbuzz believe that the average price of batteries and components will drop by 15%-20% at the end of the year. At that time, the global PV industry is likely to face a new round of reshuffle. It is worth noting that at the same time, photovoltaic giants such as Wuxi Suntech, Changzhou Tianhe, and Suzhou Artes have faced the option of defaulting on losses and continuing losses because they have previously signed higher-priced long-term contracts with upstream manufacturers. “Because the price of polysilicon has fluctuated greatly before, the downstream manufacturers have taken the long-term sign and locked in the cost to carry out the contract in order to avoid the risk of rising raw materials. But the premise must be to make money.†A large polysilicon enterprise in Sichuan said. At present, some large factories are contracts signed in 2008, with a long period of 10 years and a short period of 5 years. The agreed price is generally higher than the current spot price. On July 1, Wuxi Suntech announced that it had terminated its 10-year cooperation agreement with MEMC and paid a huge compensation of US$212 million. It is said that after the termination of the contract, Suntech will no longer need to purchase approximately 4.6 GW of wafers between 2011 and 2016, and is expected to save approximately $400 million in costs for Suntech Power over the next five years. For polysilicon manufacturers at the forefront of the industry, the price of the mid-stream and downstream enterprises will be in a downward trend due to the pressure of price and cost upside down. At the same time, the continued release of domestic polysilicon production capacity in 2011 and the low-cost competition of foreign polysilicon have forced it to focus more on unit cost control. On September 14, Leshan Power, a polysilicon leading company, announced that it will join forces with Tianwei Baobian to increase its investment of 382 million yuan to Ledian Tianwei, a subsidiary engaged in polysilicon business, to help the company implement a single polysilicon with an annual production capacity of 3,000 tons. Production line cold hydrogenation technology reform. The project has a total investment of 758 million yuan, and through technical transformation, it will effectively reduce the unit cost of polysilicon. Cold hydrogenation technology reform is one of the effective methods to significantly reduce the production cost of polysilicon. The photovoltaic faucet GCL-Poly has undergone technological transformations, which has continued to reduce the production cost of polysilicon units from 40 US dollars to the current 22 US dollars, and the competitiveness has suddenly increased. At present, the cost of most polysilicon producers in China is between 40-50 US dollars, compared with the price of about 25 US dollars abroad, there is no advantage at all. "In the current market environment, only the polysilicon suppliers that have passed the technological transformation can ensure the original stable profits. For the vertically integrated enterprises, it is possible to smooth the profit distribution of the products in the middle and lower reaches of the market. Competitiveness." The market participants believe that according to the current trend of polysilicon prices, many domestic manufacturers are already on the verge of loss. For a long time, the industry will inevitably be integrated, and 80% of the enterprises will be eliminated. Market supply and demand internal and external difficulties are difficult. For most polysilicon manufacturers, the real supply and demand situation of the downstream terminal market is still the price of the product. Especially in the European market. According to statistics, in 2010, the global installed capacity of photovoltaics was 15.8GW, of which the EU installed 12.3GW. Germany installed 6.7 GW in 2010, accounting for 42.5% of the global market share. As the world's largest PV market, Europe also accounts for 90% of the domestic PV market share. Take the lead and move the whole body. The PV subsidy policy in the European market also directly affects the supply and demand changes in the domestic PV market. In September 2010, it was precisely because European countries' subsidies to the photovoltaic industry did not expect a sharp reduction. The industry unexpectedly ushered in explosive growth after two years of freezing. The market price of polysilicon has thus climbed to $110 in early 2011. In the second quarter of this year, the price of polysilicon market was once again closely linked to the landing of PV subsidies in European countries. According to industry body information, the demand for solar energy in major European countries showed a long-lost climax in June. This made the domestic battery component destocking progress in the month. Hua Bao Securities analyst Chen Liang said that by the end of June, component inventory has dropped from 10GW at the end of April to 8GW, and the normal inventory level of the industry is close to 4-5CW. The driving force for demand is mainly from Germany, the world's largest PV market. It is reported that on the night of May 29, the German ruling coalition led by Chancellor Merkel reached a compromise on Germany’s abandonment of the nuclear power schedule. According to the plan, Germany will completely abandon nuclear power generation by 2022. New energy sources such as solar power and wind power will make up for the energy gap. In early June, the German federal government discussed and approved the amendments to the Renewable Energy Act. The plan to reduce PV on-grid tariffs, which was originally planned to take effect in March 2012, was also removed from the draft renewable energy bill. At the same time, the subsidy policy that Italy once stopped in Europe's second largest market was clear. Previously, in order to ensure that the existing installation system can be successfully connected to the grid before the subsidy is lowered, the Italian government has extended the existing Act No. 3 on the reduction of PV subsidies. However, the depth of the European debt crisis may be unpredictable by the market. In the following two months, European market demand once again fell into a downturn after a brief rebound, and the implementation of the relevant subsidy policy has not seen any movement. Correspondingly, the production capacity of domestic wafers and battery modules in the middle and lower reaches has been rising. This has finally caused the downstream supply and demand to become unbalanced again, and the low-priced digested inventories have become the fuse for this round of PV industry to fall into the trough. Although the domestic stimulus policies for the large-scale start-up of the photovoltaic power generation market were immediately introduced, it is obviously difficult for the immature Chinese demand market to eliminate the impact of shrinking demand in the European market. According to the authority EnergyTrend, the German market installed 2GW from June to August, and the installed capacity in September is estimated at 1GW, making the German subsidy revision in 2012 lower at the beginning of the year, and it is expected to carry out another wave in the middle of the year. Repair, EnergyTrend estimates that the repair rate will exceed 10%, so the 2012 annual subsidy will be revised down by more than 20%. If the European market momentum is still supported by Germany and Italy next year, the above situation will have a significant impact on the growth of the European market. EnergyTrend believes that the external environment is unfavorable for demand recovery, and future price cuts are inevitable, and manufacturers' prospects for profitability in the fourth quarter are not good. In the case of poor profitability of intermediate manufacturers, the manufacturers with better profit performance in the first half of the year will be pressured by other manufacturers to be willing to share the same risks. The price may be forced to make further adjustments to meet customer expectations. It is worth noting that September 30 and October 31 are the PV installation deadlines of Italy and Germany respectively. Market participants generally believe that most companies in these two countries will definitely pay attention to the project before these two time points. It may bring some momentum to the downstream market demand. But what is certain is that the continued sluggish demand in the downstream market has caused the new contract price of upstream polysilicon manufacturers to fall to a low point. Therefore, whether the situation of worrying supply and demand can be reversed still needs to be observed.
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