Sun & Wind Energy 9+10/201384

Photovoltaics World Market silicon & Wafer

In 2012, the polysilicon industry was plagued by overcapacities and a large inventory of 25,000 metric tons resulting from a production surplus in

2011. In addition, cash-strapped wafer manufac-turers dumped their polysilicon stocks on the spot market in order to retain liquidity”, says Johannes Bernreuter, head of Bernreuter Research. “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 per kg in the last year after it had already plummeted by 59 % in 2011.”

Capacities cut back

This trend made it difficult for many, says Bernreuter. Since September 2011, the severe price decay forced about 50 polysilicon makers – most of them small and medium China-based enterprises – to abandon or temporarily suspend their production, he says. “As a consequence, the global polysilicon production volume fell to approximately 235,000 metric tons in 2012, a drop of almost 8 % from the output of 255,000 metric tons in 2011.”

Even top producers had to bow to the price pres-sure. Wacker Chemie AG is one of them. In October

last year, the company had been forced to introduce reduced working hours at its Burghausen polysilicon facilities, curbing the production to two-thirds of its original capacity. The situation remained unchanged until February this year. Suddenly, the orders began to pick up again, communicated Wacker. But the posi-tive trend is by no means a return to the successes of previous years. In the first three months of 2013, the prices for solar-grade silicon had stayed significantly below the level of the last year.

“Solar-silicon prices continue to be a major chal-lenge,” says Rudolf Staudigl, President and CEO of the Executive Board of Wacker Chemie AG. Wacker forecasts its sales for the full-year to remain at last year’s level while earnings are expected to fall. The company is ambitious to prevent losses. Staudigl hopes to still be able to register a profit at the end of the year and wants to drive down costs, including in procuring, to get there. Construction of its new poly-silicon site in the US state of Tennessee continues, but the capital expenditure will be kept below € 600 million in the full-year 2013.

The future price trends could also be of help. IHS, a US-based market research firm, has predicted that the global solar polysilicon prices will increase by some 18 % this summer. The company believes that

Light at the end of the tunnel

Since September 2011, the severe price de­cline has forced about 50 manu facturers of poly silicon – most of them small and medium enterprises based in China – to abandon or temporarily suspend their production. Photo: REC

Like everybody else, the silicon and wafer manufacturers have been feeling

the effects of the downturn in the PV industry whose recent past has been

characterized by overproduction, falling prices and profit slumps. More than

one company has fallen by the wayside. Meanwhile, however, the most

difficult time seems to have passed and hope is growing. But the industry

players need a good strategy.

Sun & Wind Energy 9+10/2013 85

the main driver for this development will be China‘s plan to impose anti-dumping tariffs on polysilicon from several nations. Considering that China has achieved an enormous market share, the decision could have a significant impact on the global silicon price. On 24 July, China imposed its first anti- dumping tariffs on solar-grade polysilicon imports from the United States and South Korea.

Badly hit

Wacker Chemie is not the only top producer that has to fight. GCL-Poly Energy and LDK Solar are in quite similar situations. In the first quarter of this year, GCL-Poly, the third largest silicon supplier globally, had produced about 29.2 % less polysilicon than in the year earlier. “In the first three months of the year, GCL’s polysilicon output fell to 8,653 metric tons from 12,235 in the year before”, says Zhu Gongshan, the company’s CEO. During the first quarter of 2013, GCL-Poly’s polysilicon sales had been in the range of 3,702 metric tons, which is 21.7 % more year- on-year. However, Zhu Gongshan expects that the company’s polysilicon sales will eventually stabilize in the course of the year.

Nevertheless, the developments have had conse-quences for the company on the Hong Kong Stock Exchange. After the China Investment Corp. decided to sell most its stake in GCL-Poly in mid-June, the silicon and wafer manufacturer had experienced the sharpest fall on the stock exchange since October 2011, drop-

ping as much as 13 %. According to various reports, GCL-Poly now plans to establish a production site in Taiwan in order to avoid having to pay EU import tariffs on China-made solar products in the future.

GCL-Poly, however, is still better off than many competitors. In its annual report, LDK Solar, a China-based solar manufacturer, which has an annualized polysilicon production capacity of 17,000 metric tons, announced that its production had reached only 2,520 metric tons in the last year. Meanwhile, the company has shut down all its polysilicon production facilities. LDK Solar used to be among the world’s Top 10 silicon producers.

Things are no better in the wafer segment. Despite of a wafer production capacity totalling 4.8 GW, LDK Solar produced a total of only 896 MW in the last year. In the Top 10, the solar company has fallen from second to eighth place. Besides this, the vertically integrated solar company has also had to accept setbacks as regards its turnover in the module segment. LDK Solar accordingly has to deal with financial struggles. In the statements for its past fis-cal year, LDK Solar recorded a net loss in the range of US$ 1.05 billion for 2012. In the same period, the company’s net sales arrived at only US$ 862.9 million as against to US$ 2.16 billion the year before. At the end of 2012, LDK Solar had US$ 98.3 million in cash and cash equivalents while its debts reached as high as US$ 5.2 billion.

Over the past year, LDK Solar reacted with a re-duction of its workforce by nearly two-thirds. Only

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World Market silicon & WaferPhotovoltaics

8,979 full-time employees were left at the end of 2012 of the 24,449 working for the company at the end of 2011. In April this year, LDK Solar decided to sell its Hefei subsidiary and is now in talks with Chinese banks to secure its financing.

However, at the same time, the struggling solar giant was also able to land a deal. LDK Solar and the China-based solar cell and module manufacturer Realforce Power have signed a wafer supply contract for a total capacity of 500 MW. Under the terms of the agreement, LDK Solar will provide Realforce Power with 120 million wafers with shipments commencing in May 2013 through December 2014. Despite all dif-

ficulties, LDK Solar is now optimistic about the future. “We are undertaking a number of initiatives focused on the restructuring of our business. We are working closely with our stakeholders and relevant govern-mental agencies to negotiate solutions”, says Xingxue Tong, President and CEO of LDK Solar. “Furthermore, we remain committed to improving our cost structure by driving down production costs, tightening operating expenses and adapting our overall busi-ness to the evolving demand environment to position LDK Solar for long-term growth.” Xinxue Tong’s hopes are particularly on new and emerging markets. “While China still represents the strongest global growth

Company2011 2011 2012 2012

Production [in MW] Capacity [in MW] Production [in MW] Capacity [in MW]

GCL-Poly Energy Holdings Limited 4,488 8,000 6,305 8,000

LDK Solar Co., Ltd. 2,230 4,300 896 4,800

Yingli Green Energy Holding Co Ltd. 1,190 1,700 1,350 2,450

Canadian Solar Inc. 150 228 1,100 2,000

ReneSola Ltd. 1,214 2,000 1,702 2,000

Nexolon Co., Ltd. 1,200 1,800 1,230 1,850

Jiangxi Sornid Hi-Tech Co., Ltd. 957 1,600 1,260 1,600

Tianwei New Energy Holdings Co., Ltd. 600 1,000 1,000 1,500

Huantai Silicon Sci. & Tech. 822 1,250 1,287 1,500

Jinglong Group Co., Ltd. 1,263 1,500 900 1,500

Top 10 wafer producers

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Source: IHS iSuppli Corporation, company data

opportunity, we believe that Southeast Asia, Africa, India and the United States are among several emerg-ing markets with growth potential. We are focused on increasing our market share in these areas.” One step in this direction is a supply contract for PV modules recently signed by LDK Solar with a major project developer based in Thailand.

In Europe, too, the industry players are reacting to the market development. One of them is REC Solar,

a Norway-based solar manufacturer, which plans to split itself into two entities and run its silicon and solar divisions as two independent companies.

Change for the better

Things now seem to be turning for the better at least in the wafer segment. In the first quarter of the year, GCL-Poly produced wafers with a capacity of

In October last year, Wacker Chemie had to reduce working hours at its Burghausen poly­silicon plant. Photo: Wacker Chemie

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Sun & Wind Energy 9+10/201388

Photovoltaics World Market silicon & Wafer

1,231 MW, which is about 5.8 % more than in the same period the year before, and generated 1,482 MW in sales, which corresponds to an increase of 20.1 % year-on-year. During the Intersolar North America trade show, Jake McKee, Associate Director of Engineering, announced that GCL-Poly plans to bring its wafer sales up to 8,135 MW in the course of the year.

GLC is not the only company growing. NPD Solarbuzz, a US-based market researcher, forecasts that the wafer production for the solar industry will increase by 19 % globally in 2013 to surpass the 30 GW mark after falling by 15 % in the year before. However, while Solarbuzz comes to the result that the wafer production went down in 2012, IHS reports that the six largest wafer manufacturers were able to ramp up their production in the same year. According to the analysts at IHS, the production capacities ranged at about 50 GW in 2012. In contrast, the annual survey conducted by SUN & WIND ENERGY comes to the con-clusion that the wafer industry produced a total of around 34 GW in 2011, followed by 36 GW in 2012. With almost 29 GW, the lion’s share was produced in China last year. 5.7 GW came from other countries and wafers with less than 1 GW from Europe whose importance could be expected to further decrease af-ter the exit of Bosch in 2014 in case no other compa-ny buys and resumes Bosch’s production capacities.

On the other hand, the production capacities of the global manufacturers went up from 59 GW in

2011 to around 61 GW in 2012. In total, SWE sur-veyed 125 manufacturers from around the world. The study therefore includes a larger number of partici-pants than those of other market researchers, which are often restricted to listed companies.

Solarbuzz sees the reason for the positive devel-opment in the emergence of new markets and one market in particular: “Supported by attractive solar PV incentive rates, Japan will account for more than 10 % of the global PV demand in the year 2013,” says Charles Annis, Vice President at NPD Solarbuzz. “With a strong rooftop segment and limitations on the availability of land for large-scale ground-mount installations, Japan has now become a key driver for PV modules based on crystalline silicon.” Neverthe-less, it is expected that the utilisation of the global production capacities will not be higher than 60 %. Together with the stagnating prices, the low utilization rates in the industry will put limits on the profit ability of the wafer production in the year 2013.

The trends on the Japanese market are also lead-ing to a change in the location policy of the wafer manufacturing industry. Panasonic, a Japan-based wafer maker, is an example of this. The company re-cently reported that it plans to exit the United States. This summer, the solar wafer production in Oregon will be ended and only the plant’s ingot production be continued. In California, Panasonic had already shut down its wafer production in the last year. The company now plans to raise the capacities in its

According to Jake McKee, Associate Director of Engineering, GCL­Poly plans to strengthen its leading position in 2013. Photo: Europressedienst

The new REC Silicon will be headquartered in the United States. The picture shows the Moses Lake REC Silicon plant in the United States. Photo: REC

Sun & Wind Energy 9+10/2013 89

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Photovoltaics World Market silicon & Wafer

wafer plant in Malaysia, which began operating in February this year and reaches an annual production capacity of 300 MW. Panasonic has put a clear focus on Japan, where it already operates solar cell and module production lines. In a statement, the company said that it expects strong and robust de-mand for solar products in Japan, especially in the segment for the private rooftops. Another company that has been attracted to Malaysia is Comtec Solar, a China-based producer of solar wafers. The com-pany plans to establish a new plant with a capacity of 1 GW in the country, which will start operating by the end of the year.

Full order books

Solargiga Energy, a China-based manufacturer, re-ported that its wafer production is already booked out for the full year. The company has a production capacity of about 900 MW and announced that it has already sold or received orders for its entire produc-tion from customers in Japan this year. But the de-mand is not only strong in Japan. China is also very promising at the moment, says Hsu You Yuan, CEO at Solargiga Energy. “The end-customer demand trend continues to grow in popularity in 2013 for PV develop ment, mainly driven by strong market de-mand from the PRC and Japan. In traditional PV mar-kets like the EU and still largely untapped markets like the United States – both operate under the fear of anti-dumping duties and countervailing tariffs amid an ongoing trade dispute”, he says. “In 2012, the EU accounted for 11.2 % of the total group turn-over while the United States only accounted for 0.5 %. Meanwhile, China and Japan account for approxi-mately 83 % of the total top line. Therefore, we believe the trade spat with the EU and United States has less impact on the group. Due to the trade dis-pute, the group is actively developing the Turkish market to compensate, as well as hoping the Eurasian

Forecast of wafer shipment of major producers in 2013 Graphic: Solarbuzz, GCL

country can become a stepping stone to enter the markets of Europe, Africa and the Middle East.”

Another company currently positioning itself is Qatar Solar Technologies, a joint venture of the Qatar Foundation for Education, Science and Community Development (70 %), SolarWorld AG (29 %) and the Qatar Development Bank (1 %). The company’s target market is Qatar and the Arab world. In October 2012, the Qatari government formulated the goal of install-ing PV systems with a capacity of 1.8 GW until the year 2014. The goal is to increase the share of renew-able energy up to 20 % of the total energy mix in the long-term. In view of these prospects, Qatar Solar Technologies now plans to set up a fully integrated solar production in Qatar. The facility will be built in the new Ras Laffan industrial area. The first step will be the production of solar silicon, followed by solar ingots, wafers, cells and modules. According to the company, the construction of the first section of the silicon plant with a capacity of 8,000 metric tons is al-ready in full swing and will be completed in the fourth quarter this year. “Qatar Solar Technologies is a strong advocate of the 2030 Qatar National Vision and will seize every opportunity that will turn this vision into a reality – beginning with the manufacture of polysilicon, the key ingredient of the world’s most efficient solar panels, and expanding through to the manufacturing and installation of solar modules and solutions”, says Khalid Klefeekh Al Hajri, Chairman and CEO of Qatar Solar Technologies. “It is worth mentioning that solar energy will compliment Qatar’s conventional sources of energy. QSTec’s polysilicon plant in Ras Laffan Industrial City, when fully expand-ed, will have the capacity to produce 6.5 GW of solar power. QSTec will continue to collaborate and partner with key local and international organizations to shape the future of the solar industry throughout Qatar and the region.”

During Intersolar Europe, two more companies, GreenGulf and Kinetics, signed an agreement for the construction of a new wafer plant, which will have a capacity of 750 MW and be located in Yanbu, Saudi Arabia.

So far, the overcapacities are still the dominat-ing factor for the global silicon and wafer manufac-turers – and as long as the capacities remain high, there will be little room for the prices to recover in any significant way. Nevertheless, the market analysts believe that the worst has been overcome. Throughout the rest of the year, the consolidation phase will continue, but 2013, some say, could be the turning point.

Markus Grunwald, Enrik Dema

Further information:Comtec Solar: www.comtecsolar.comGCL-Poly: www.gcl-poly.com.hkLDK Solar: www.ldksolar.comPanasonic: www.panasonic.comQatar Solar Technologies: www.qstec.comREC Group: www.recgroup.comReneSola: www.renesola.comSolargiga Energy: www.solargiga.com/htmlWacker Chemie AG: www.wacker.com

Consolidation of the wafer market

S&WE: Experts predict that prices for wafer and silicon are going to rise. Would you agree? How do you evaluate the situation on the international PV market and how do you cope with it?Florian Dieckmann: ReneSola has upgraded its own polysilicon production to lower its production costs even further. Our cash cost is now around US$ 15 per kg while competitors are buying poly at US$ 18 per kg or more. This gives us an advantage and helps us to deliver positive results to our shareholders. Now, if prices for wafer and silicon should rise, as predicted, our company’s prudent strategy will pay off two-fold.

S&WE: Everybody is eying Japan right now. How do you assess the country’s PV market and which chances do you see there for your company?Dieckmann: Emerging markets such as Japan fit perfectly into our company’s overall strategy to diversify market share and reduce risk in more hum-bling markets. From the perspective of ReneSola’s European division, we have to cope with the fact that Europe is no longer the only important market. Our teams in Asia have already managed to win a strong market share in Japan by leveraging our brand our product policy. As an environmentalist, I think the development in Japan is good news overall, not just for ReneSola.

S&WE: The European market has changed significantly recently. How do you evaluate the European market and which role does it play for ReneSola?Dieckmann: For years we have seen European installation companies adapt to almost constant-ly changing market environments, which are mostly affected by erratic politics in certain European countries. This year we have also seen that companies meet the changes by adjusting their business models or introducing entirely new ones. In this respect, market consolidation helps drive the vanguard. Also, and rather surprisingly, demand is not as price flexible as often assumed. This is due to continuously optimized down-stream profit margins, such as in the BOS sector. But let’s not forget: the sun will continue to shine without charging its consumers, fossil fuel prices will surely not fall, the environmentalist movement will never rest, and European politi-cians will continue to find ways to reduce their dependency on fossil fuel imports and decrease their country’s carbon footprints, therefore European markets will sustain and ReneSola will continue to increase its share in those markets.

The interview was conducted by Markus Grundwald.

“Market consolidation helps drive the vanguard”

Three quick questions to Florian Dieckmann, EMEA Marketing Manager at ReneSola.

Florian Dieckmann, Marketing Manager at ReneSola Photo: ReneSola