From pv magazine 09/2021
From 2020, the wafer, cell and module segments are expanding rapidly, bringing total capacity to 264 GW, 322 GW and 365 GW by the end of the first half of 2021, respectively. It is expected that each segment will reach 365 GW, At the end of the year – 439 GW and 463 GW, respectively. Global polysilicon production is projected to reach 550,000 metric tons this year, which could provide about 190 GW of modular production.
The outlook for the polysilicon business looks good in the short term. However, trade disputes between the United States and China are adding uncertainty. The US Customs and Border Protection (CBP) has issued a Waiver of Authorization (WRO) order to Hoshine Silicon Industry in Xinjiang, restricting the import of silicon dioxide products associated with the company and its subsidiaries. The US Senate also passed the Uyghur Forced Labor Prevention Act, which bans the importation of all goods produced in Xinjiang. Since Xinjiang is a center for the production of metallic silicon and polysilicon, serious discussions have begun about the implications of the restrictions.
While the WRO does not restrict polysilicon imports, some module manufacturers face the risk of confiscating their products as their materials may come from Hoshine, the largest supplier of metallic silicon. According to the Hoshine FAQ published by CBP, solar importers entering the United States must provide documents that can track the supply chain and show that the silica used in the products was not sourced directly or indirectly from Hoshine or any from its subsidiaries.
Low-end manufacturers say it is difficult to provide such information due to the complex nature of polysilicon production. As of August, some manufacturers’ modules are reportedly being seized by CBP officers, and some were released shortly thereafter. Currently, the CBP verification standard and specific measures remain unclear.
If the Uyghur Forced Labor Prevention Act is approved by the United States House of Representatives and signed by President Biden, imports of all goods produced in Xinjiang will be prohibited. The first blow will come from Xinjiang-based polysilicon producers, including Daqo New Energy, Xinjiang GCL, TBEA and East Hope, as well as silica producers from the region.
Supply / demand forecast
In addition to the US, Canada and Mexico are likely to impose similar sanctions. The next could be the EU, where several member states have recently passed or drafted laws to combat forced labor in supply chains. Australia and Japan have also expressed concern about human rights violations in Xinjiang and may soon follow suit with restrictions on goods from the region.
Xinjiang accounts for 35% to 40% of the world’s silicon production. Hoshine, the world’s largest producer of metallic silicon, holds 20%. PV InfoLink estimates that 20% to 40% polysilicon may be restricted to imports from the US or Europe.
It is estimated that about 20% of polysilicon will not be able to ship to Europe or the US if the WRO is applied only to Hoshine. However, polysilicon production outside Xinjiang could provide 82 GW in the second half and 196 GW and 218 GW, respectively, in 2022 and 2023, which is enough to meet demand from the United States and countries that may impose import restrictions. In doing so, manufacturers should pay attention to whether CBP employees will confiscate individual imports for investigation. In the short term, the supply of modules to the US market may be slightly affected.
If the Uyghur Forced Labor Prevention Act is passed, the polysilicon produced by Daqo, Xinjiang GCL, TBEA and East Hope in Xinjiang will no longer be used for modules that are exported to the United States. In addition, after deducting about 40% polysilicon in other countries. In regions that use silica from Xinjiang, about 33 GW, 84 GW and 100 GW of polysilicon will be available in the second half of 2021, 2022 and 2023, respectively – enough to serve the US market.
However, if Europe, the second largest market, bans imports from Xinjiang this year, there will be immediate shortages of polysilicon in regions outside Xinjiang in the short term. If this happens in 2022, supply of polysilicon outside Xinjiang will be in short supply and will be slightly reduced during the high season. According to the 2023 scenario, the total supply of polysilicon will again be excessive after the commissioning of large volumes of new capacities.
It appears that both the WRO and the Uyghur Forced Labor Prevention Act will have little impact on US demand. Whether the demand for solar energy will lead to a shortage of polysilicon due to the Xinjiang problem in the next two years depends on the actions of European countries. The current enactment in Germany and Norway of laws against forced labor in supply chains is variable that could affect solar energy exports to Europe, although Germany has not implemented import restriction measures. Meanwhile, the European Parliament is developing rules and policies related to Xinjiang, and trends in the polysilicon market depend on their progress and decisions.
The impact of Xinjiang-related issues on the industry will be less severe after 2023, regardless of when the specific law is passed. Polysilicon producers have made big profits over the past year on the back of rising polysilicon prices. In addition to tier 1 manufacturers who are expanding their capacity on a large scale, REC Silicon, CSG Polysilicon and LDK, whose lines have been shut down, are evaluating the possibility of restarting production. Strong profitability is attracting new entrants such as Xinjiang Jingnuo, Lihao Semiconductor, Baofeng Energy and Runergy, all of which plan to expand capacity outside the Xinjiang region to hedge political risk. If these new furnaces are commissioned as scheduled, the total polysilicon capacity will significantly exceed demand, leading to fierce price competition. If tier 1 polysilicon producers that are commissioning capacity earlier cause price reductions due to surpluses, new entrants who enter the competition later, or tier 2 polysilicon producers who plan to reopen the lines may be conservative about their expansion plans. capacities.
about the author
Corrin Lin – Chief Analyst at PV Infolink. PV InfoLink is a PV solar PV market information provider specializing in PV systems supply chain. The company offers accurate quotes, reliable information on the PV market as well as a global PV market supply and demand database and market forecasts. He also offers professional advice to help companies stay ahead of the competition in the marketplace.