China’s reported $ 7 billion plan To reduce the overcapacity of polysilicon, waffle makers could lead to spending cheaper material and push prices higher, whereby suppliers of cell and module are more willing to accept increases, says Senior market analyst at S&P Global, says PV -Magazine.
The six largest polysilicon producers in China are reportedly developing a $ 7 billion plan to reduce oversupply and to stabilize prices. If implemented, the relocation could increase prices in the supply chain in a short period, according to Xin you, senior market analyst at S&P Global, who said that the current market trends of anti-invitation and efforts to curb disorderly competition can prevail.
“We are currently uncertain about the authenticity of this plan,” she said PV -Magazine. “However, consolidation at industrial level in polysilicon is technically feasible. And Polysilicon is the best node to implement consolidation due to a higher market concentration, more rigid capacity and a greater impact on the entire supply chain.”
She said that the biggest obstacle can be the lack of consensus, because deteriorating debts and cash positions at most top companies make it difficult to support large -scale acquisitions after a long number of net losing.
“They may need extra financial support from policy banks and state -owned companies (SOOs),” she said. “It will be difficult for top suppliers to pick up $ 7 billion themselves. Banks, Soes and other investors can get involved. Moreover, there can be more buyers than just the original top six companies.”
She noted that as the prices of Polysilicon have risen in recent weeks, tier-two companies are now less willing to sell, with some medium-sized companies that do not want to be taken over and, instead, position themselves as buyers. Other sellers can try to increase their valuations and request a higher fee.
“The plan includes a complex negotiation of interests at multiple parties,” you said, adding that the ideal outcome would remove around 1 million tonnes of capacity, with ratings in the range of CNY 50,000 ($ 6,970) to CNY 70,000 per tonne per ton, up to $ 7 billion to $ 10 billion. “But the final consensus remains uncertain. It is possible to implement it in multiple phases with less capacity to be obtained in the beginning.”
If it is successful, the market would retain approximately 2 million tonnes of capacity, with usage percentages checked at 60-70% to meet demand.
“In my opinion, if the plan is implemented and the results meet the expectations, this will be reflected in the prices in a short time, because wafers manufacturers will have cheaper polysilium in stock and raise prices, while suppliers of cell and module will accept more price increases compared to now,” she said. “However, it will not lead to a significant price increase, especially after the recent increase, and stable prices can remain just above production costs, because the remaining capacities still exceed worldwide demand.”
“Stricter requirements for power consumption can also be implemented in the near future to accelerate the acquisition process, because many outdated facilities with level-three power consumption are forced to close, reducing the difficulty of negotiations,” she said, referring to a recent government measure to assess the to be assessed energy -saving situation From polysilicon plants.
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