Opis, Wood Mackenzie and Bernreuter research have spoken with PV -Magazine About the alleged $ 7 billion plan to reduce Polysilicon oversup and to restore a sustainable price environment for the PV -Supply Chain, but the opinions remain divided over the feasibility and effectiveness.
The six largest polysilicon manufacturers of China are planning to raise around CNY 50 billion ($ 7 billion) to buy and be inactive about a third of the country’s production capacity, Reuters reported, referring to a statement by GCL Technology Holdings.
If performed, this movement would close approximately 1 million tonnes of lower quality capacity. Sources from the industry say that this would be enough to restore a sustainable price environment in the photovoltaic supply chain.
“This initiative is currently standing out as the most striking government regulation and intervention in the Chinese Polysilicon market,” ” Jun won LeeSolar analyst at Opis told, told PV -Magazine. ” Although our sources keep a close eye on the progress of this, opinions remain divided over its feasibility and its overall effectiveness. “
With reference to industry insiders, Lee said that at least 30% of the proposed CNY 50 billion financing must come from the leading Polysilicon producers of China, who have had more than 18 months of losses. The source of the remaining 70% remains unclear.
“The purchase price per kilogram must balance the interests of both buyers and sellers,” he said. “Sources in the industry note that most polysilical projects are declared a capital expenditure from CNY 70/kg to CNY 80/kg, although the actual average Capex that was likely to have risen during construction and operation is probably lower than CNY 60/KG.
The The treatment of the acquired facilities is another unsolved problem, according to Lee. “Participants in the industry wonder if these assets are downright or closed again,” he said. “They note that without permanent dismantling, surplus capacity would remain largely intact. This concern partly explains why the Ministry of Industry and the Information Technology assesses the energy -saving situation of polysilicon plants, aimed at redefining ‘effective production capacity’ and significantly reducing the reporting of the reported reporting” “” “” “
Johannes Bernreuter, the head of Bernreuter Research, which is based in Germany, remains Skeptical about the plan in general.
“I cannot imagine that the vehicle will be fully financed by debts and suspect that any equity will come from state entities,” he said. “The bigger problem in my eyes is the enormous existing stock volume. Most of the relevant capacities for closure are currently not in production anyway. That is why the immediate impact will probably be limited.”
Bernreuter said that the six manufacturers involved in the operation – Tongwei, GCL, Daqo, Xinte, East Hope and Asia -Silicium – have a combined capacity of almost 2.5 million MT, while the remaining producers are only 700,000 MT good.
‘In addition to this 700,000 MT, additional capacities for acquisition can come from projects currently under construction, “he said.”I still doubt that industrial giants such as Hoshine, Qiya, Baofeng or Hongshi will voluntarily sell their polysilicium activa. “
Yana Hryshko, who manage Global Solar Supply Chain Research at Wood Mackenzie, that she is more optimistic about the plan.
“The plan is not as complex as it seems, especially in a highly consolidated production environment such as the PV sector of China,” she said PV -Magazine. “The close coordination between the production industry and the government in China makes the coordination of such large-scale actions much more feasible. The technical capacity is there, and the political and industry seem to be coordinated.”
Hryshko claimed that collecting the money is not the real problem. ‘As soon as the decision has been taken at the highest level to implement the plan, the financing will follow, “she said.” In the context of China, when a strategic priority is established, especially with the level of integration of the government industry that we see in the PV room, they find a way to make it happen. We hear that the money will not be collected directly by the suppliers, but by the government. It is possible that a further purchase of the VAT discount for PV modules and cells will occur. “
Hryshko noted that resistance of small polysilicon manufacturers may not be released. ‘Risen, for example, left his polysilicon company completely, “she added.”And this approach is not limited to polysilicon. We see similar trends in waffles, cells and modules. According to our data, manufacturers have already started limiting production and the stock levels in China have fallen considerably. There is a growing consensus in industry that it is more economically rational to close surplus capacity than to continue to produce with losses. “
Hryshko said that the effects of these first maneuvers are already visible. ‘The prices for all components of PV module have begun to rise and that trend is expected to continue in the short term. We remain with our earlier prediction: module prices will probably stabilize around $ 0.12/W to $ 0.14/W, “she said.
In many respects, this is the informal ‘rescue plan’ of the industry: temporarily limiting production, repairing oversupply and recovering only if the question is recovering. “For solar cell and module facilities, this approach is relatively flexible because those lines can be reused. Polysilicon, however, is more complex because of the capital intensity and stiffness of the infrastructure. The production is expected to be controlled by the largest players,” concluded Hryschko.
OPIS analyst Lee remains careful with the potential success of the plan. “It is unlikely that it will turn the current decline in itself,” he said, and noted that, although the Chinese Polysilicon prices have returned since the beginning of July under various government measures, they have remained stable for the past two weeks. Persistent high inventory levels, a recovery of the monthly output in the past two months, and the weak demand for end user continues to exert the fundamental pressure on the market.
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