Research Report on China's Polysilicon Industry, 2012

In 2011, the production of polysilicon in Siemens method in China was about 75,000 tons, with an increase of 72.4% YOY. If added with the production of polysilicon in physical method and silane method, the total production of China's polysilicon was close to 80,000 tons in 2011. The capacity under production reaches 120,000 tons; meanwhile, the production capacity of 100,000 tons is under construction. Currently, there are about 80 polysilicon production enterprises in China, forming the competition pattern which is dominated by Jiangsu Zhongneng, Luoyang Sino-silicon, Xinguang Silicon and other enterprises.

Although the production capacity planned by China's polysilicon industry is large, enterprises are still generally faced with technical problems. A large number of production lines are in the trial phase, or due to high production costs, there is no actual production. In 2011, the total import volume of polysilicon in China was 64,614 tons, with an increase of 36% YOY; the import amount was USD 3.814 billion, with an increase of 42.1% YOY. This means that China's import demand for polysilicon is still great.

The production costs of Chinese polysilicon enterprises are much higher than the international standards. When polysilicon prices are high, Chinese enterprises can still make profits. With the gradual decline of prices of polysilicon in the international market, the profitability of domestic enterprises presents a downward trend. The international average production cost of polysilicon with improved Siemens method is about 20-23 USD/kg, while the polysilicon production costs of Chinese enterprises is around 30-40 USD/kg which is about 50-60% higher than the international cost.

In the second half of 2011, when a large number of solar energy enterprises in Europe and America stopped production or closed down, and the environment of international PV market was further deteriorated, prices of polysilicon globally continued to fall and even hit the minimum value since the financial crisis in October, and continuously refreshed the record low. With the continuous decline of prices, Chinese polysilicon enterprises began to stop production in a large scale. By the end of 2011, except for part of polysilicon plants, about 80% of the polysilicon enterprises in China suspended production, with dismal market performance.

The Chinese government introduces the requirements of Polysilicon Industry Access Conditions. For example, the scale of each solar-grade project should be over 3,000 tons/year, and that of semiconductor-grade project should be over 1,000 tons/year. For solar-grade projects, the overall energy consumption must be less than 200 kWh/kg. In terms of environmental protection, except that the water cycle efficiency is more than 95%, waste water, waste gas, solid waste, noise and other aspects also must meet the relevant environmental standards. Currently, over half of Chinese polysilicon manufacturers are small enterprises, and the annual production capacity is generally 1,000-3,000 tons. These enterprises mostly cannot meet the requirements of the production scale and energy consumption. It is expected that by the end of 2012, these SMEs are mostly eliminated. It is also estimated that, there would be about 20 polysilicon manufacturers left in China eventually according to the Polysilicon Industry Access Conditions.

In China, the growth space of polysilicon demand is large and the development prospect of the industry is bright with large numbers of market opportunities. But China's polysilicon industry is in a period of development, facing technological risks, environmental protection risks, barriers to international trade and other risks. Accordingly, investors need to be cautious.

More following information can be acquired through this report:

• Supply and Demand of China's Polysilicon
• Policies of China's Polysilicon Industry
• Import and Export of China's Polysilicon
• Chinese Major Polysilicon Manufactures
• Prediction on Development of China's Polysilicon Industry

Following people are recommended to buy this report:

• Polysilicon Manufactures
• PV Enterprises
• Polysilicon Trade Enterprises
• Research Institutions and Investors Focusing on New Energy Industry

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