Polysilicon prices fall, photovoltaic companies re-signed long list

In Europe, where photovoltaic solar energy is blossoming, domestic solar cell and module manufacturers have signed a large number of long-term supply contracts (hereinafter referred to as “long orders”) with upstream (polysilicon and silicon wafer) companies in order to control raw materials. However, after the financial turmoil suddenly dropped, the long single became a hot potato.

“We are revising the previous long-term clauses with our customers.” Li Xianshou, Chairman of Zhejiang Haohui Sunshine Energy (2.46,0.19,8.37%) Co., Ltd. (hereinafter referred to as “Zhejiang Yanhui”) who manufactures silicon wafers on the afternoon of May 5th Tell the CBN reporter. In addition to Zhejiang Yonghui, other upstream solar energy companies in the country are also revising the bill. Industry insiders estimate that the total amount of revision will be several billion US dollars.

In the past three years, the scarcity of polysilicon and the boom in the solar cell market have brought the price of polysilicon up to $500 per kilogram. Downstream companies signed a five- to ten-year long-term contract to lock in raw material prices to prevent "shortage of food." However, the domestic trend of signing orders has come. Not long ago, MEMC, one of the world's largest polysilicon manufacturers, changed the price of polysilicon in long orders with Suntech and a Taiwan-funded company.

A customer of the LDK company, a silicon wafer manufacturing company, disclosed to the CBN reporter that he was discussing with the LDK about the re-signing agreement. However, he himself did not know the result, but re-signing “is not ours” was a trend. On April 21st, German photovoltaic manufacturer Conergy again proposed to MEMC to "remove" a 10-year long list worth hundreds of millions of dollars. Li Xianshou said that most companies will not take this radical approach of canceling orders. "The two sides should consider long-term cooperation."

Another deep-seated reason for not completely canceling orders is that when the downstream companies signed long-term orders, some of the prepayments were put into the account of the upstream company, and the latter took money to produce polysilicon and silicon wafers. Due to long-term single-time spans of 8 to 10 years, downstream deposits are sometimes paid more than the total amount of raw materials they have reached in one or two years. If all contracts are cancelled, the deposit will be gone.

Long-term orders will not be revoked, but many of the terms in it need to be reconsidered. A high-level executive from Jiangsu Zhongneng Silicon revealed to reporters that the prepayment has shifted from cash payment to account period, acceptance bill and letter of credit. Li Xianshou said that every quarter or every six months, upstream and downstream companies will revisit the current price of polysilicon, and decide on how to buy each other.

“The current mode of operation is basically to amend the price and quantity. Of course, the upstream supplier is looking forward to changing the pricing, keeping the quantity but increasing the delivery time, so as to maintain the total amount of the order. But it depends on the negotiation between the two parties. "A procurement manager said. The weakening of polysilicon prices, weaker market demand, and the expansion of polysilicon production all triggered the collapse of the “long order” model.

However, from September and October of last year, due to the market depression, polysilicon plummeted from US$500/kg to US$70-80/kg. If battery companies do not re-evaluate the long-term “lock-in price”, the consequences will not only be as simple as the impairment and accrual at the end of last year; it will also be due to the serious deviation between the current market price and the pre-locked price, and advance the huge price difference between the two. .

Only a long-term company held by Wuxi Suntech in 2006 has a value of more than US$7 billion, and the time span is ten years. Other solar modules such as JA Solar and Linyang New Energy have more than one billion U.S. dollars worth of such long orders. Moreover, the sluggish market sales make it difficult to maintain the long-term model. A high-level solar energy company revealed: “Although the solar shipments in April have improved over the first three months, whether the market picks up will depend on the months of May and June.” It is more challenging than the weak demand. The upstream production capacity is still expanding, and polysilicon prices may continue to decline.

The capacity of the world's seven largest polysilicon companies will be increased from 28,000 tons in 2008 to 47,200 tons in 2009. China's polysilicon production capacity this year may also total about 9,000 tons, and the total global production capacity in 2010 will be 100,000 tons. Polysilicon is likely to be surplus.