Polysilicon Manufacturing are cutting down their Production heavily; Plant Utilization currently averaging in mid 60%'s, according to the new report released by Solar Buzz (link).
This contrasts with historic plant utilization rates at above 90%
typically provided by the leading polysilicon suppliers to the solar PV
industry. Even when polysilicon spot prices declined 70% between Q1’11
and Q2’12, Tier 1 polysilicon suppliers maintained these high
utilization rates.
“Polysilicon makers strive to run plants at optimal capacity levels,
where maximizing production offers the lowest cost structures by
spreading depreciation costs over a larger volume. This often results in
the highest yields, avoids shutdown/start-up costs, and enables volume
purchases of raw materials,” stated Charles Annis, Vice President at NPD Solarbuzz.
Accordingly, polysilicon suppliers maintained high utilization rates
while prices remained above cash costs. When average spot prices fell
below $20/Kg in Q3’12, and continued down to $16/Kg in Q4’12, even
Tier 1 makers with best-of-class cost structures were forced to adjust
production levels.
China, the world’s largest end-market, consumed approximately
188,000 tons of polysilicon for PV applications between Q1’11 and
Q3’12. However, during the same time period, 262,000 tons of materials
were provided to the Chinese market from a combination of domestic
production and foreign imports.
In particular, foreign imports grew to record highs during most of
2012. As a result, the 74,000 tons of excess supply contributed to a
strong inventory buildup and, combined with weaker than hoped end-market
PV demand during 2H’12, ultimately led to the recent utilization
corrections.
The reduced utilization rates have also had a profound impact on the
previously aggressive capacity expansion plans of PV polysilicon
suppliers. In fact, several Tier 1 polysilicon manufacturers, including
Wacker, Hemlock, OCI, and Tokuyama, have now decided to delay ramping up
and building new polysilicon plants.
“The rationalization of supply finally started stabilizing
polysilicon prices towards the end of Q4’12, and this trend continues
into early Q1’13,” added Annis. “Even so, price pressure is expected to
remain strong with polysilicon makers hoping to increase utilization
rates as early as possible. Moreover, several polysilicon plants are
still currently scheduled for completion, but this new capacity is
likely to remain idle until end-market PV demand increases.”
