Silicon material price avalanche, some silicon material plants plan to stop production and maintenance

At the end of March, the price of silicon material ushered in an avalanche! Some enterprises have already reported a price below 60 yuan / kg!

According to PVinfolink, since March, the price of cauliflower has been continuously decreasing, and the price difference with dense materials has also increased. Just last week, the price of cauliflower was still 63~70 yuan/kg, and the average price was 65 yuan/kg.

The chart below shows the price curve of silicon material for the first 12 weeks of 2019.

Figure: Silicone price curve in 2019 (yuan/kg)

According to industry insiders, the price of some vegetable foodstuffs has been lowered to 58~60 yuan/kg this week, and the drop in one week is as high as 9%!

According to reports, at the price of less than 60 yuan / kg, many silicon materials companies have no profit. At present, there are already silicon material factories in the market to do the shutdown maintenance plan. The industry believes that if prices continue to be sluggish, more companies will join the ranks of production shutdowns.

1. What is the reason for this round of price cuts?

Zhang Zhiyu, a researcher at the Evolution Fund, believes that:

This round of silicon material price avalanche was triggered by the release of too much new capacity. At the end of 2017, the national production capacity was only 270,000 tons, and only 200,000 tons of capacity was put into the last half year, including 50,000 tons of Tongwei Baotou, Leshan, and 50,000 tons of GCL Xinjiang, and 40,000 tons of Xinte Energy. 30,000 tons.

The demand for the downstream is relatively low. Although the overseas market is hot, the Chinese market, which accounts for 40% of the global market, has no large-scale real demand due to unclear policies, resulting in a sluggish overall demand. The upstream expansion and the downstream demand are superimposed, which is the most important reason for this round of price cuts.

In addition, due to the recent production of new capacity, they are all in the process of commissioning, and the output and quality are climbing. Some new capacity cannot meet the demand of monocrystalline silicon wafers and can only be sold at a lower price for the production of polycrystalline silicon wafers. The process of releasing new capacity is the process of widening the price difference of silicon materials.

2. What will happen to this round of price cuts?

1) Part of production capacity clearing

This round of silicon material price cuts will have substantial capacity to exit, representative production capacity is South Korea's OCI and China's eastern region of production capacity, this part of the total capacity of about 120,000 tons, their withdrawal is the market bottoming mark. Therefore, this round is why the price goes from the old capacity to the exit speed and terminal demand.

The silicon production capacity and cost of each company are shown in the figure below.

Figure: Cost and capacity distribution of various silicon companies in 2019 (yuan/kg)

2) Polysilicon wafer cost benefits from silicon material price difference

As mentioned above, the low quality of silicon material in the initial stage of new capacity is difficult to meet the demand for use of single crystal silicon wafers, and can only be used for the supply of crystalline silicon wafers; the quality improvement of a large number of new production capacity requires a process, and the production capacity of a large amount of silicon material is released. The increase in the supply of low-quality silicon materials, however, the current demand for polycrystalline silicon wafers is weak, and the price of low-quality silicon materials is avalanche under the contradiction between supply and demand.

According to the current price, the price difference between single and polycrystalline silicon materials is increased to 22 yuan/kg. Under this price difference, the cost of silicon material for polycrystalline silicon wafers will be 0.25 yuan/piece lower than that of monocrystalline silicon wafers, and the competitiveness will increase.

However, with the improvement of the quality of new silicon material production capacity, the price difference between single and polycrystalline silicon materials will inevitably shrink gradually.

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