References:All company details were taken from company websites, Reuters as well as Factiva and Amadeus databases.
Value Chain Activity: Producing Polysilicon
Process metallurgical-grade silicon (quartz) to produce electronics-grade or slightly less pure solar-grade silicon. It is used to manufacture crystalline wafers for solar modules. Around a quarter of the cost of a crystalline module is just for polysilicon. After years of supply shortage, the industry has finally ramped up capacity to clear the supply bottleneck. Yet, demand for high-quality silicon means that some capacity shortages remain. According to renewableenergyworld, the industry's global revenues were $6.29bn in 2010.
The market remains dominated by the established poly-silicon producers Hemlock, Wacker, REC, MEMC, Tokyama and LDK Solar that produce top-quality silicon. They are now increasingly challenged by GCL Solar and OCI, though questions about quality of the production remain. All top-7suppliers are large cap companies (market cap between €1bn -€4bn) with strong balance sheets (high interest cover up to 30 and low leverage). Apart from MEMC and REC, none of the top-7 is forward-integrated, and even they are only integrated into wafers. Due to significant costs of establishing a new production facility, there is no imminent risk of newcomers to the market.
The smaller suppliers are much more diverse: There are conglomerates (JFE Steel) as well as highly specialised companies like Arise Technologies or Timminco. As there are many new rivals, even gross margins are often still negative. Smaller companies are often forward integrated into cells (Arise, ersol, Hanwha) or specialised solar-grade producers (Silfab, Timminco, RSI Silicon).
Supply & Demand
The market for polysilicon is shared between electronics and solar. In 2000, only 10% of polysilicon was used for solar cells, rising to over 50% in 2008. This trend will continue in the next decade.
Polysilicon Average Cost Trends
As the cost of raw silicon makes up only 4% of the total silicon production costs, the price drop in raw silicon did not change the cost structure at all.
However, due to the drop in demand, the average margins have come under pressure, increasing the pressure on cost. Companies with access of cheap energy will therefore have an absolute cost advantage.
In comparison, medium-term estimates for solar-grade producer Timminco are $20/kg for production cost at a gross margin of 25%, reflecting the discounted price for solar-grade over high-purity polysilicon.
Polysilicon Spot Price
Following a collapse in demand for solar electricity at the same time as new polysilicon capacity has come online, the spot price for polysilicon has collapsed from a $450 per kg peak in August 2008 to below $100 in June 2009. However, contract prices have always been well below the spot market. According to a CSFB report, average polysilicon contract price in 2009 is well South of $60 per kg.
It is expected that demand will resume in the second half of 2009. However, due to larger capacity, the price of polysilicon will probably not hit the $100 mark for some time to come.
|Name||Corporate Ownership||Vertically integrated?||Country||Comments|
|Hemlock||Joint Venture between Dow Corning (63.25%), ShinEtsu (24.5%), Mitsubishi Materials (12.25%)||Only polysilicon, but part of Dow Corning Chemicals||USA||Plan to increase capacity to 36,000Mt production by 2010 (and 10-fold in 10 years)|
|Wacker Chemie AG||Part of chemicals company||Germany||Produce wafers thru subsidiary Siltronics|
|REC ASA||Yes, into wafers, cells and modules||Norway||2008: Capacity: 225MW for cells, 150MW for modules. Plan: 780MW for cells, 740MW for modules. Silicon produciton in USA|
|Tokuyama||Part of chemicals company||Japan||Increase production capacity from 5,200 to 8,200 in spring 2009|
|MEMC||Yes, into wafers||USA|
|Mitsubishi Materials||Mitsubishi||Part of chemicals company||Japan|
|Osaka Titanium Technologies||formerly known as Sumitomo Titanium||Specialises in silicon and titanium products||Japan||Produces polysilicon and by-products as well as titanium products.|
|Other high-purity polysilicon manufacturers|
|GCL Solar Energy||Yes, into wafers||China||In 2008 1,500Mt poly-Si capacity using modified Siemens process. Planning for 10-times!|
|KCC Corporation||Part of chemicals company||South Korea||Planning to have poly-Si production by 2010|
|Nitol Solar||Yes, into wafers. Solar pure-play||Russia||Plan to build 3,800Mt production facility in 2009. Will produce high-purity polysilicon. Comes from chemical industry.|
|OCI Company||(formerly DC Chemical)||Part of chemicals company||South Korea||Producer of high-purity 9N polysilicon. Capacity: 5,000t (2008) to rise to 26,000t (2010). Based on Siemens process.|
|Siliken||Part of chemicals company||Spain||With Siliken Chemicals, Electronics and Modules produce poly-Si, modules, inverters. Module production 92MW|
|Vector Japan Co||Yes, into wafers||Japan||Mainly a wafer business, but also supplier of poly-silicon.|
|Solar-grade silicon manufacturers|
|Arise Technologies Corp||Cell manufacturer, planning to integrate into polysilicon||Canada||Producer of cells. Plan to produce solar-grade si (7N plus) using patented process by 2009. 20MW 2009, 90MW 2010|
|Elkem Solar||Orkla owns a control stake in Elkem Energy||No||Norway||Developing solar-grade silicon. In testing and verification. Plan to have 6,000Mt capacity. This is a re-focus of what once was an aluminium producer.|
|Globe Metallurgical||Yes, forward-integrating into polysilicon from metallurgical-grade si.||USA||Sell metallurgical-grade silicon. Will offer solar-grade silicon soon. Also sell by-products|
|Jaco Solarsi Ltd||with $10m equity investment from HSBC Venture Fund||No||China||Producer of solar-grade (upgraded metallurgical si). Capacity 1000Mt (2008). One of the largest solar-grade suppliers.|
|JFE Steel||JFE Holding||Polysilicon is one part of a wide portfolio of materials.||Japan||Main business is steel. In solar: Produces solar-grade silicon with 400t annual capacity.Produce silicon wafers targeted at solar batteries - 180MW capacity.|
|Jiangxi Trinity Material||Yes, into wafers, cells and modules||China||Founded in 2008, produces both electronic-grade and solar-grade silicon.|
|RSI Silicon Products LLC||No||USA||Will provide solar-grade Si - at 33% of product cost. Begin production in 1000mt plant in 2009|
|Silfab||No||Italy||Produces solar grade silicon. Plan to produce 2,500Mt in 2009, 500t in 2010|
|SolarValue AG||-||Germany||Develop solar-grade silicon process. After technical difficulties in 2009, pursues new technology. Want to cover whole value chain in future.|
|Timminco||No||Canada||Solar grade silicon producer with proprietary silicon purification process. Supply contract with Q-Cells|
|Re-cycling of silicon|
|ersol Solar||Bosch Group (Now: Bosch Solar)||Yes, into wafers, cells and modules||Germany||Specialises in re-cycling of silicon. Wafers are made from polysilicon. Thin-film tech is a-Si.|
|Renesola Ltd||Yes, into wafers||China||Specialises in re-cycling of waste silicon into solar-grade silicon. Plans to move into polysilicon production from 2009 with 3,000t capacity.|