Industry thresholds soaring polysilicon industry will scrape the wind

Or promote photovoltaic parity online

On the eve of the Spring Festival, a document that has far-reaching impact on domestic polysilicon and the entire photovoltaic industry - "Plastic Industry Access Conditions" has been published in newspapers and websites.

Experts in the industry pointed out that the document is still largely directed at the ills of the domestic low-end polysilicon project with serious pollution and excessive energy consumption. After the document is issued, it will set a fairly high entry threshold for the industry. It is good for the polysilicon plants that have already released the production capacity, but it will bring considerable development pressure to some enterprises that have just entered or intend to enter. At the same time, access conditions will also encourage companies to reduce costs and then lower polysilicon prices, which will ultimately help to promote PV parity.

Industry threshold

The "Plastic Industry Access Conditions" (hereinafter referred to as "Access Conditions") issued this time is basically consistent with the draft of the Exposure Draft at the beginning of last year: the minimum capital ratio of investment in new construction and renovation projects shall not be less than 30%, environmental conditions. No polysilicon project can be built within 1000 meters of the high demand area. The solar-grade polysilicon project has a scale of more than 3,000 tons per year, and the solar-grade polysilicon reduction power consumption is less than 80 kWh/kg.

“Although it is roughly the same, there are still some minor changes.” Meng Xianyu, vice chairman of the China Renewable Energy Society, said in an interview yesterday that the officially issued “Entry Conditions” gave a year of stricter reduction of electricity consumption. The grace period allows the company to have time to complete the technological transformation.

According to the "Admission Conditions", the solar power reduction power consumption of solar grade polysilicon must be less than 60 kWh/kg before the end of 2011, and the recovery rate of silicon tetrachloride, hydrogen chloride and hydrogen in the reduction tail gas is not less than 98.5%, 99% and 99%. Before the end of 2011, the solar-grade polysilicon production line with integrated power consumption greater than 200 kWh/kg will be eliminated.

However, in the view of Meng Xianzhao, the requirements for the "Entry Conditions" are still relatively high, and many domestic enterprises are unable to reach the difficulties.

"Difficulties come from two aspects: First, technically, due to foreign technology blockade, China's polysilicon purification technology is obtained through various channels, but after all, it is not the most advanced, many companies are unable to achieve closed loop; second, the capital, With the introduction of the '38th Document', the bank has stopped lending to the polysilicon project, and enterprises will face severe financing problems in order to carry out technological transformation,” said Meng Xianyu.

Despite this, he told this reporter that the introduction of the "Entry Conditions" is still necessary, and any industry should have certain access, otherwise it is not conducive to the long-term development of the industry. Considering that the "Entry Conditions" provisions have been relatively detailed, it is expected that no other policies will be introduced in the short term.

Ping An Securities analyst Dou Zeyun believes that the polysilicon industry has large investment and slow output, and may face greater price competition and integration pressure in the next two years, which requires the operating companies to have strong financial strength and risk tolerance. Therefore, for established factories, access conditions can effectively limit new entrants to impulse investment.

"This will relatively reduce the domestic supply growth in the short term, but it can achieve effective allocation of policies and capital resources. While cultivating several large-scale enterprises, it can improve the quality of domestic polysilicon and significantly reduce production costs. Conducive to the long-term healthy development of China's photovoltaic industry." Dou Zeyun said.

Industry giants benefit

As early as 2009, after the country tightened polysilicon approval, the industry speculated that the future "polysilicon access conditions" will benefit large enterprises. After the official publication of this document, the industry generally believes that the "access conditions" will trigger a major reshuffle of the polysilicon industry, and some large-scale large enterprises will benefit from it.

Jiang Qian, chief energy analyst of China Investment Consulting, pointed out that 80% of the domestic polysilicon manufacturers are small enterprises, generally in the scale of several hundred tons. These enterprises are not up to the size and energy consumption at the end of 2011. It will be the “big limit” for the elimination of these SMEs.

According to Yang Ping, a new energy analyst at Guolian Securities, the investment cost of 3,000 tons per year at an investment cost of 800,000 yuan per ton means an initial investment scale of 2.5 billion yuan, and the minimum capital ratio in project investment should not be less than 30%, both of which have greatly raised the funding threshold, and some speculative companies will be turned away.

“This is conducive to the development of large enterprises in the industry. The latter can give full play to scale advantages and reduce production costs. At the same time, industry concentration will be further improved.” Yang Ping said.

Zhou Tao, an analyst at Great Wall Securities, also believes that after the introduction of the “Entry Conditions”, the polysilicon industry will be integrated, and some smaller, lower-tech polysilicon production capacity will be eliminated. The production capacity with cost and technical advantages will be on the market. Standing more stable, the industry pattern may be closer to the oligopoly. He believes that CSG A ( 18.76 , 0.00 , 0.00% ) and other companies that have significantly reduced their costs through technological transformation can benefit from it.

“CSG's cold hydrogenation technology retrofit project will reduce energy consumption and cost, and its cost will be reduced from about US$38 per kilogram to around US$30. Considering its integrated PV industry chain, investors are advised to pay close attention.” Zhou Tao said .

Jiang Qian’s conclusion on the future industry pattern of polysilicon is: “The stronger and stronger are out.” In his view, the “Entry Conditions” will eventually lead to the formation of about 10 polysilicon producers in China.

Zhang Lei, an analyst at CIC Securities, suggested focusing on industry leaders with cost advantages, focusing on the low-cost impact of technological breakthroughs such as the diffusion of fluidized bed methods and physical methods.

"In the long run, the decline in polysilicon prices is an inevitable trend, and companies with cost advantages will win. It is recommended to focus on GCL-Poly (3800.HK). With the upgrading of technology, the industrialization of polysilicon production at a lower cost is not ruled out. Bringing new opportunities in the industry, you can pay attention to Erdos ( 18.25 , 0.00 , 0.00% ) . Zhang Lei said.

Industry integration is inevitable

Whether it is willing or not, some small and medium-sized polysilicon enterprises in China are destined to usher in a real difficulty in 2011. A industry-wide hurricane of survival of the fittest and big waves will soon start.

“The pressure of industry consolidation in the short term is mainly from price competition.” Dou Zeyun, an analyst at Ping An Securities, pointed out that the reason for this is that the polysilicon industry has the characteristics of high investment and slow output, and it is difficult to make production targets in the early stage of production. More accurate judgments, so the implementation of the "access conditions" for the existing enterprises in the industry remains to be seen.

In fact, the growth rate of the photovoltaic industry in 2010 exceeded the expectations of almost everyone. According to the statistics of Ping An Securities, China's PV module production in 2010 was about 10GW, corresponding to 70,000 tons of polysilicon. In 2010, China's polysilicon production capacity is close to 90,000 tons, and the output is about 46,000 tons. Customs data show that in the first 11 months of 2010, the cumulative import of polysilicon reached 42,000 tons. It can be seen that after considering the factors affecting the increase of inventory, the domestic demand for high quality polysilicon is still very strong.

“Compared with foreign traditional manufacturers, most domestic polysilicon enterprises are small in scale, high in cost and high in quality. With the increase of capacity supply by foreign competitors, their living space is more challenged. If the downstream demand in 2011 and 2012 is not optimistic , the price of polysilicon will also have a large decline, industry integration will be inevitable." Dou Zeyun said.

Meng Xianyu said that if the threshold in the "Entry Conditions" can be achieved, the production cost of polysilicon can be controlled at about 30 US dollars per kilogram, which is very close to the average production cost of polysilicon in the world. "After all, price is the core of the policy. The purpose of the "Entry Conditions" is to promote photovoltaic power generation to achieve parity online through national regulation."

Zhang Lei, an analyst at CIC Securities, also believes that the “access conditions” have limited impact on the supply of polysilicon in the short term. In the long run, it will help low-cost large-scale enterprises to win, and the reduction of raw material costs will help the photovoltaic industry to move toward parity.

He predicted that after the entry conditions are introduced, some high-energy, high-cost and small-scale manufacturers will have their production capacity closed. However, the small amount of such manufacturers has a limited impact on the supply and demand of the actual market. The "Entry Conditions" is conducive to promotion. Enterprises will reach production faster and reach relevant indicators. In the future, new projects will tend to be declared with larger capacity scales, which will help the industry to form a cluster advantage. The specific energy consumption and other indicators will help manufacturers to accelerate the production cycle and Industrial upgrading with low cost and low energy consumption.

"At present, the spot market price is mainly the price of the first few polysilicon manufacturers in China. They have reached the entry requirements in terms of scale, indicators and environmental protection. Therefore, the spot price is subject to disturbance. In the long run, the access conditions are favorable to the industry. Accelerated integration, low energy consumption and low cost direction will ultimately help reduce the cost of terminal components, and the ultimate goal is to achieve parity online." Zhang Lei said.  

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