Post by pling on Mar 4, 2016 18:16:38 GMT
Fra seekingalpha.com 2. mars 2016
- Polysilicon prices have always seen sharp ups and downs due the changing demand-supply economics of the solar industry. Polysilicon companies saw amazing amount of profits during 2008-2011, as prices of polysilicon shot up to $400/kg resulting in profit margins of 90%. This led to capacity expansion as majority was lured by high profitability. However, by the end of 2011, there was an oversupply when compared to the demand for solar panels. This led to prices crashing to $20-25/kg, while cost for smaller companies remained at $40-50/kg, resulting in bankruptcies of a number of polysilicon companies. Bigger producers like GCL Poly (OTCPK:GCPEF) and Wacker (OTC:WKCMF) were still able to breakeven given their low cost of production. Currently, there is a situation where prices of polysilicon (~$13-14/kg) is close to the costs, though it is higher in China because of anti-dumping duties on imported polysilicon.
- The wafer part of the solar supply china is already witnessing price improvements. I believe the polysilicon part of the supply chain has almost reached a bottom and should now see a favourable trend going ahead. Polysilicon prices should rebound with companies not expanding capacity despite increasing demand. Polysilicon takes the most amount of time in setting up new capacity (2-4 years) and can give good returns going forward.
- Global solar trade wars and increased industry oversupply are the main reasons behind low polysilicon prices
- The prices of polysilicon have decreased from around $22/kg in H1’14 to $15/kg during Q3’15
- Limited polysilicon capacity expansion may lead to a supply shortage in the future
- The prices look like they have bottomed out and should rebound going forward
- Polysilicon prices have always seen sharp ups and downs due the changing demand-supply economics of the solar industry. Polysilicon companies saw amazing amount of profits during 2008-2011, as prices of polysilicon shot up to $400/kg resulting in profit margins of 90%. This led to capacity expansion as majority was lured by high profitability. However, by the end of 2011, there was an oversupply when compared to the demand for solar panels. This led to prices crashing to $20-25/kg, while cost for smaller companies remained at $40-50/kg, resulting in bankruptcies of a number of polysilicon companies. Bigger producers like GCL Poly (OTCPK:GCPEF) and Wacker (OTC:WKCMF) were still able to breakeven given their low cost of production. Currently, there is a situation where prices of polysilicon (~$13-14/kg) is close to the costs, though it is higher in China because of anti-dumping duties on imported polysilicon.
- The wafer part of the solar supply china is already witnessing price improvements. I believe the polysilicon part of the supply chain has almost reached a bottom and should now see a favourable trend going ahead. Polysilicon prices should rebound with companies not expanding capacity despite increasing demand. Polysilicon takes the most amount of time in setting up new capacity (2-4 years) and can give good returns going forward.