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How Low Can Polysilicon Go?

Polysilicon is selling on the spot market for around $22/Kg currently and long-term contract prices are only moderately higher. Prices have fallen below cash-costs for many smaller polysilicon producers, causing them to reduce or stop production. As illustrated in some recent examples below, the polysilicon cost equation varies significantly by maker, technology, region and scale of production.

  • During its Q1’12 investors conference on May 17, GCL announced inclusive polysilicon manufacturing costs of $19.7/Kg, which they expect to fall to $18.5/Kg by the end of Q2’12.
  • In its May 11 Q1’12 earnings release, ReneSola indicated that in-house fully-loaded polysilicon manufacturing costs had been reduced to $30/Kg and are expected to fall to $25/Kg ($18/Kg cash costs) by the end of Q2’12. The company’s Phase II facility is projected to have total costs less than $20/Kg when ramped up in the second half of this year. ReneSola has also indicated that it possess proprietary technology capable of enabling $10/Kg polysilicon in the future.
  • In its March 21 financial review, Daqo suggested costs will be <$30/Kg in FY12, potentially reaching $25/Kg by Q1’13.
  • During the Silicon Materials session at SNEC 2012, GT Advanced Technologies pointed out that fully-loaded Siemens costs for top tier manufacturers are typically around $24/Kg. The company indicated that by adopting a variety of productivity enhancements GTAT is now offering, customers may be able to reduce loaded costs to <$20/Kg in the next few years.
  • Chinese UMG manufacturer ProPower stated during the Silicon Materials session at SNEC that its loaded costs are about $12 and that cash costs of about $9 may even be possible.
  • Also, during the Silicon Materials Session at SNEC, REC explained how it had dramatically reduced FBR (fluidized bed reactor) polysilicon costs from around $33/Kg in 2010 to only $19/Kg currently. REC’s analysis suggests that if it built an FBR fab in China, cash costs could be further reduced by lower silicon metal and labor costs. REC also believes Capex/Kg could be cut in half by building a new optimized FBR facility and through “location savings.” REC stated it has not made any decision to invest in a new FBR plant in China, but implied that when the market recovers, China would be a top priority for new capacity and it can achieve total costs as low as $11.3/Kg.

Many polysilicon producers will not survive the new, low price polysilicon environment. But some top tier makers do have cost structures that may enable them to be profitable in 2012 and are actively pursuing roadmaps that can lead to even lower costs in the future.

How to reduce material costs, and how low they can go, are themes dominating module ASP projections and operating margins possible across the value chain. Further discussions are featured in the new Solarbuzz Polysilicon and Wafer Quarterly report.