The global PV industry can expect polysilicon prices to go up in the next few quarters as Roth Capital Partners believes the reported fire incident at GCL-Poly fab in Xinjiang may take 10% of the global production offline for as much as 9 months. (Photo Credit: GCL-Poly Energy Holdings)
- GCL-Poly Energy is reported to have experienced explosions at its Xinjiang fab, according to Roth checks
- This is going to take offline some 10% of the global polysilicon production capacity which is not expected back for another few months which could be as much as 9 months
- Competitors Daqo and other polysilicon producers likely to benefit from the current situation as ASP’s go up
- Module makers as Canadian Solar and JinkoSolar may see their module costs increase with higher polysilicon pricing
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A series of explosions at the Xinjiang manufacturing facility of GCL-Poly Energy, believed to have been caused due to overpressure in the rectification and boron removal filter, have raised concerns over the supply of polysilicon from the Chinese company. Roth Capital Partners, referring to its checks and initial reports coming in, believes this will take an estimated 50,000 metric ton (MT) of the company’s production capacity offline for a good 3 months to 6 months, may be even more. It could be as much as 9 months given the ‘apparent magnitude of the damage.’ There were pictures about the damage floating on the WeChat platform that since have been removed.
This would represent 10% of global production of polysilicon, said Philip Shen of Roth, and adds that this unfortunate situation is likely to work in favor of GCL-Poly’s competitors Daqo New Energy and other producers.
At publication time, there was no official news from GCL-Poly on its website on the unfortunate incident.
“This also comes on the heels of a comparably small interruption at a DQ facility producing ~6k MT due to a small fire, which—though much smaller—still represents another 1-2% of global capacity offline,” stated Roth analysts. The fire incident at Daqo took place in early July 2020.
These situations are anticipated to push up prices of polysilicon with an immediate effect as the global PV industry is emerging from the impacts of the COVID-19 crisis. Roth has changed its average selling price (ASP) quarterly forecast for polysilicon as below:
- Q3/2020: previous forecast of $7.45 per kg revised to $8.20 per kg
- Q4/2020: previous forecast of $7.80 per kg increased 13% to $8.80 per kg
- Q1/2021: previous forecast of $8.00 per kg hiked 5% to $8.40 per kg
GCL-Poly’s Xinjiang facility was reported by the company, in April 2020, to be operating at full capacity producing 48,000 MT annually under phase I while the manufacturer wants to scale it up further to 60,000 MT. In 2019, GCL-Poly suffered RMB 197.2 million net loss attributing it to decline in polysilicon and wafer prices.
Total global silicon production capacity is around 500,000 MT. The world’s largest polysilicon capacities are owned by Tongwei at about 90,000 MT, followed by GCL at around 80,000 MT and Daqo, which guides for a 2020 production output range between 73,000 and 75,000 (see Daqo Ticked All The Right Boxes in Q1/2020).