Polysilicon and photovoltaic product prices collectively "dive"

On June 21, the June solar energy value chain index announced by Bloomberg New Energy Finance showed that spot price of polysilicon fell by 28% on a month-on-month basis to 53.4 US dollars/kg. Affected by this, the price of PV products in the downstream has also appeared in different ranges of “diving”. For example, the price of a 6-inch polysilicon wafer decreased by 23% in June to a new low of 2.39 US dollars/tablet; more downstream polysilicon module prices dropped by 15% to 0.92 US dollars/watt.

What are the reasons for the sharp decline in prices of polysilicon and photovoltaic products? What impact will it have on China's photovoltaic industry and companies? The reporter recently conducted an interview.

Say goodbye to the "profit era"

"The recent sharp decline in polysilicon price and photovoltaic product prices is mainly due to problems in supply and demand." Xiao Han, a researcher in the new energy industry of China Investment Advisors, said that from the perspective of supply, the high level of profitability of the photovoltaic industry in 2010 is particularly high in the polysilicon industry. It stimulated a large number of manufacturers to launch polysilicon projects or expand production capacity. With the commissioning of these projects, the production of polysilicon and photovoltaic modules has increased substantially, and the market situation of oversupply has appeared. From the demand side, European countries have reduced their PV subsidy policies. As a result, the installed capacity of photovoltaic installations in Europe has been greatly attenuated, which has directly affected the export volume of domestic polysilicon and photovoltaic module manufacturers, resulting in a large backlog of photovoltaic products. "At the same time as demand is decreasing, supply is increasing substantially. How can prices stay the same?" said Xiao Han.

Song Liang, an analyst in the new energy industry at the China Circulation Productivity Promotion Center, agrees. He also pointed out that the traditional European countries with large PV installed capacity, such as Germany, Spain, and Italy, are affected by their own economic weakness, and can not afford more funds to support the development of new energy such as photovoltaics.

Meng Xianwei, deputy director of the China Renewable Energy Society, pointed out that the decline in polysilicon prices is a normal phenomenon. Up to $500/kg previously was an abnormal performance under the influence of severe supply shortage. Now that the prices have dropped drastically, it can be seen that polysilicon is gradually saying goodbye to the “windfall of profits” and is returning to the path of rational development.

Meng Xianlu also pointed out at the same time that according to the current production level of some leading domestic companies, even if polysilicon falls to the current US$50/kg, they still have a lot of profit. “Some domestic enterprises that master high-end production technologies can stabilize polysilicon production costs at only 22-25 US$/kg.” Meng Xianyi said that with the continuous progress in the production process, polysilicon prices still have some room for decline.

Xiao Han believes that achieving photovoltaic grid-level pricing is the ultimate direction for the development of the photovoltaic industry. At present, the price of PV modules still falls short of this level, so it can be predicted that prices of polysilicon and photovoltaic modules will continue to fluctuate in the coming period. . "From the point of view of the development of the industry, the decline in the price of polysilicon and photovoltaic products is an inevitable development of the industry." Xiao said.

However, in Song Liang's view, the current price of polysilicon fell to about 50 US dollars per kilogram, basically reached the bottom. In the next 3-5 years, with the start of the domestic market and the European economy gradually out of the "shadow", the global demand for photovoltaic will surge. By then, polysilicon and photovoltaic products prices will rebound.

Step into the industry "winter"

At present, polysilicon accounts for about 40% of the price of photovoltaic modules. Based on this, Xiao Han believes that its price reduction will effectively drive down the cost of photovoltaic power generation, thereby promoting the expansion of the market size of photovoltaic power generation; the expansion of the market size of photovoltaic power generation will in turn drive the increase in the demand for photovoltaic modules, and promote the company's shipments. growth of.

"At the same time, the industry's 'winter' brought about by the price reduction will be conducive to the survival of the fittest and industry integration in the photovoltaic industry. Enterprises with technological advantages, financial advantages, brand advantages, and scale advantages will be further strengthened, and small and medium enterprises that do not have market competitiveness Enterprises will be eliminated, and the competitiveness of the entire industry will be enhanced," said Xiao Han.

Meng Xianzhe also believes that the result of market competition is the survival of the fittest. After this price “diving”, those small and medium-sized enterprises that have a small scale of production and poor production technology and have no price advantage will face bankruptcy or conversion.

While some large domestic companies have benefited from the vertically integrated industrial chain that has been established, their control over operational risks is relatively strong and their negative impact is not great.

Yao Feng, LDK Director of LDK, said that due to the establishment of the entire photovoltaic industry chain, the price “diving” did not bring too much impact on LDK’s profitability and production scale.

Even so, in Xiao Hsuan's view, the current domestic photovoltaic market has not yet started, the European PV market has cooled down, and the “cold flow” of price cuts has made the Chinese PV industry face a grim situation. "Especially for domestic small and medium-sized photovoltaic companies, in the absence of advantages in technology, brand, scale, etc., the living environment of these companies will face greater challenges." Xiao Han pointed out.

Previously, it was reported that Suntech Power expects to see less increase in shipments in the second quarter, and the gross profit margin will not change much from the first quarter. Large companies such as Trina Solar and Yingli expect to see a drop in gross margin in the second quarter.

Large companies are facing the dilemma of “greased” gross margins, and the situation of small businesses is even worse. Mr. Yang, a relevant person in charge of a small polysilicon production company in Jiangsu Province, told this reporter that the polysilicon production cost of the company is 50 US dollars/kg, trading at the current spot price, its production and operation status will undoubtedly be greatly deteriorated, they have to turn to competition Other industries to ease.

Learn to "find" in the "crisis"

“Critical moments test the response capabilities of enterprises, which include product quality, brand marketing, industrial integration and other aspects.” Xiao Han suggested that Chinese PV companies should see companies from the “danger” of price “diving”. The "machines" of development are prepared in the following ways.

“First, we must improve product quality and increase technology research and development. This is the foundation of enterprise development. Without reliable quality and advanced technology, Chinese PV companies will lack the impetus for further development.” Xiao Han pointed out, “Second, we must increase Brand promotion and product marketing. With the increasingly fierce competition in the photovoltaic market, the market has become more and more mature, and good corporate branding and product marketing are increasingly important."

Xiao Han believes that in the end, it is necessary to increase industrial integration and promote the development of upstream and downstream integration. Especially for the market leader, how to integrate the industrial chain and promote the integration of upstream and downstream development is more significant, it can effectively enhance the company's ability to resist risks.

Song Liang believes that at present, photovoltaic companies face development difficulties, and the relevant government departments should come up with projects like “Golden Sun” and franchise bidding to support the development of photovoltaic companies to help them weather the storm.

Meng Xianji reminded that companies in the industry must realize that the polysilicon industry is no longer a profit-making industry. On this basis, we must consider how to reduce costs and how to make enterprises competitive in product quality and price, in order to confirm their increasingly fierce market in the future. Whether there is an advantage in competition and whether it can win.

“If companies want to have a place in this industry, they must strengthen their core competitiveness, strengthen the research and development of key core technologies and cutting-edge technologies, and establish modern enterprise management mechanisms. In particular, they must pay attention to core technologies and high-end talents.” Told this reporter.

“The photovoltaic industry must insist that if we stick to it for 5 to 10 years, we can reach the level of parity Internet access. At that time, the vast domestic market can really open up, so from this point of view, the outlook is still more optimistic, and it is not necessary to feel a bit fluctuating and feel pessimistic. We hope that our company will find a suitable development path for itself,” said Meng Xianjun.