Polysilicon companies want to increase prices, downstream "do not buy it"

In the past two months, there has been no significant rise or fall in the price of polysilicon, but now polysilicon companies have hoped to save themselves by increasing their selling prices. The attitude of downstream wafer companies is “not to buy”.

Recently, the management of a silicon listed company revealed that there are currently some polysilicon companies that are really brewing to mention the price of polysilicon products ranging from $25 to $30 per kilogram to more than $30.

The polysilicon price dropped from 475 US dollars/kg in February 2008 to the current “floor price”. Among them, the 2011 market is also surprising, falling from the high of 70 US dollars / kg more than half. As sales prices have already fallen below some of the company’s manufacturing costs of around US$34/kg, many companies have stopped production.

Great Wall Securities's public report recently also pointed out that polysilicon raw materials by the international market prices affect the individual domestic companies to try water price increases, quoted by RMB 200 per kilogram rose by 10%. However, the report pointed out that the short-term increase in the price of polysilicon has no practical significance. The fundamental reason is that the cost is still higher than the market price. Most manufacturers are in the state of suspending maintenance. Therefore, the current spot market for polysilicon is basically in a freezing period.

According to public information, the China Nonferrous Metals Industry Association’s Silicon Industry Association last month reported that Tianwei Change, Leshan Electric, and Chuantou Energy had all reported the suspension of production or production cuts. Recently, a local company in Zhejiang known as “Silicon Silicon Industry” has also been exposed by the media and will enter the bankruptcy liquidation stage, reflecting the dismal operation of the polysilicon industry.

"At present, there are only 5-6 polysilicon companies in operation, and dozens of companies have already stopped production. Of course, although the number of operating companies is small, it also accounts for more than 70% of domestic polysilicon demand." A senior executive from GCL-Poly also pointed out.

However, since January this year, some polysilicon companies have started to discuss price increases with downstream silicon companies.

The aforementioned silicon wafer company management said that this proposal has not actually been responded to by downstream companies such as silicon wafers. “The reason is simple. We can buy cheap polysilicon products from all over the world. We can sign long-term framework agreements with overseas companies and get goods on a monthly basis. We can also obtain very cheap polysilicon in the spot market.”

The aforementioned GCL-Poly executives also pointed out that, as the peer said, although the price of polysilicon has remained stable, the market demand is not as large as it seems.

“Some polysilicon companies can raise their prices because they saw stable sales from September to December last year – Germany’s photovoltaic installations suddenly broke out, especially in November and December (last year). The installed capacity of 3.5G watts, and the entire installed capacity of Germany in 2011 is only about 7.5G watts. "The GCL-Poly high-level pointed out, "Do not forget that the overall cost of overseas polysilicon companies is lower than Chinese companies, Therefore, they can sell directly to Chinese companies; secondly, due to the sudden outbreak in the German market at the end of last year, it is very likely that PV sales will show a downward trend in the first quarter of this year. The price, once the demand really drops sharply, the result is that the wafer companies need to bear these losses. So, GCL-Poly will not adjust the price temporarily, and it is also waiting to see the market.”

The report of Great Wall Securities pointed out that some of the recent wafer factories indicated that they would increase their prices after the Lunar New Year so as to ensure their profitability. However, whether or not they can raise prices depends on the market environment.