The global polysilicon industry will return to the path of growth and increase its production by 6.5% in 2013, according to Bernreuter Research. The polysilicon market research firm projects the global polysilicon net demand - including that of the semiconductor industry, but excluding the consumption of inventories - will amount to approximately 250,000 metric tons (MT) this year. The spot price is predicted to rebound to a level of US$20-25/kg by the end of 2013.
Polysilicon manufacturers will profit from the slightly accelerating growth of their largest customer, the solar industry, which makes up almost 90% of total polysilicon demand. "The global solar market will pick up speed - albeit at a slower pace than we originally assumed," says Johannes Bernreuter, head of Bernreuter Research. "We now expect new solar installations to reach 35-37GW in 2013. China, Japan and the USA will replace Germany and Italy as the solar growth locomotives."
In 2012 the polysilicon industry was plagued by overcapacities and a large inventory of 25,000MT resulting from a production surplus in 2011. In addition, cash-strapped wafer manufacturers dumped their polysilicon stocks on the spot market in order to retain liquidity. The wave of secondary sales from wafer companies and traders accelerated the slump of the spot price: the average rate for high-purity polysilicon crashed by 47% to a record low of US$15.35/kg in 2012 after it had already plummeted by 59% in 2011.
Since September 2011, the severe price decay has forced about 50 polysilicon manufacturers - most of them small and medium enterprises in China - to abandon or suspend production. In the third quarter of 2012, all top producers began to bow to the price pressure as well and reduced the utilization rates of their plants. According to Bernreuter Research, the global polysilicon production volume consequently fell to approximately 235,000MT in 2012, a drop of almost 8% from the output of 255,000MT in 2011.
"Along with the large inventories and the supply of thin-film modules, those 235,000MT were nonetheless sufficient for a newly installed solar capacity of 33-34 GW worldwide in 2012," says analyst Bernreuter. However, the latest shipment guidance of 13 major public solar module manufacturers points to new installations of only 30-31GW. "The actual result could still be somewhat higher for two reasons: thanks to a better fourth quarter, several of these manufacturers may have exceeded their guidance, and other producers have possibly gained additional market share," explains Bernreuter. "If the markets in China and the US had a strong finish, 31-32GW are possible."
Although polysilicon inventories have not completely been digested yet, the spot price reached a bottom at the turn of the year. An installation rally in Japan ahead of a probable feed-in tariff (FIT) cut in April, healthy demand for solar PV systems in China and the introduction of punitive duties on polysilicon imports to China anticipated in February will drive the spot price upwards in the first quarter.
Even if China should impose duty tariffs as high as 50%, as is rumored, Bernreuter Research does not expect a strong revival of the China-based polysilicon industry. "The manufacturing costs of most producers are still too high and the quality of their product is too low," says Bernreuter. "We assume a lot of foreign polysilicon shipments for China-based customers will be diverted to wafer manufacturers in Taiwan and then imported as wafers or solar cells to China."
