Based on the SEMI trade association’s polysilicon shipment data as well as REC Silicon’s own estimates, a total of 271,000MT of polysilicon was shipped in 2014, suggesting between 42GW to 43GW of PV modules were produced last year.
REC Silicon highlighted at its recent earnings call that the polysilicon shipment data indicates that global end-market demand was therefore lower than many market research forecasts had anticipated.
Tore Torvund, president and CEO of REC Silicon, noted that independently tracked polysilicon shipment data from the 10 largest producers was said to have reached 223,000MT in 2014. When combined with REC Silicon’s own analysis of the rest of the sector, a total of 271,000MT was estimated to have been shipped last year, enabling between 42GW to 43GW of PV modules to be produced and shipped.
According to the most recent polysilicon market analysis undertaken by GTM Research, the base case global demand for polysilicon in 2014 was estimated at around 290,000MT, which would have resulted in around 19% growth over the prior year and inline with PV end-market growth rates.
However, REC Silicon’s Kurt Levens, VP, commercial operations acknowledged that the figures do not take account of any potential inventory overhang from 2013, though noted that end-market forecasts have to include thin film modules, which are not large consumers of silicon.
However, simply based on previous shipment guidance from the two leading thin-film producers, First Solar and Solar Frontier at least 2GW of module shipments can be attributed to this sector in 2014.
Neither executive mentioned whether their estimates also took into consideration ongoing polysilicon/wafer usage reductions, such as a reduction in kerf loss and thinner wafers as well as important cell efficiency gains.
GTM Research noted that it expected the average PV wafer silicon utilisation rate to decline from 5.3 grams per watt (g/W) in 2014 to 4.7g/W by 2018, with best-in-class producers expected to be at around 4.1g/W.
Despite these potential omissions, Levens cited China’s NEA figures for grid connected PV in 2014 of 10.6GW, supporting the thesis that overall global demand ended lower than expected when compared to third party market forecasts of between 44GW to 47GW.
The Chinese government had a target of 14GW to be installed in the country in 2014, revised mid-year to 13GW, due to the slow first-half year installations and lack of meaningful distributed generation (DG) installations at that time.
Some of the publically listed polysilicon producers had remained at full-capacity through most of 2014 and had reported basically stable pricing, indicating a good level of demand and supply balance.
REC Silicon did note in its earnings call that it experienced pricing pressure in the fourth quarter on weaker than expected demand, primarily in China, though this was also attributed to rumours of duties being imposed on polysilicon imports, which were said not to have yet been implemented.
Based on the polysilicon shipment analysis of SEMI, REC Silicon and thin-film estimates at least 44GW was installed in 2014, while the high-end would be in the 46GW range.
Market research firm, IHS had recently guided 2014 installations at 45.7GW.
Recently, Bloomberg New Energy Finance (BNEF) guided final 2014 installs to be 48.4GW, while Mercom Capital guided global PV installations to have reached around 47.5GW.
Polysilicon demand in 2015
According to REC Silicon’s Torvund, effective polysilicon capacity is expected to reach around 284,000MT by the end of the first-half of 2015. With further effective capacity coming on stream this year, that total was expected to increase to around 321,000MT.
Levens noted that such levels of effective polysilicon capacity would support PV module production of around 50GW to 55GW in 2015. However, anywhere within this range could lead to periods of tight supply, depending on inventory levels in the supply chain.
Based on this assessment of effective polysilicon capacity in 2015, PV end market demand growth of around 20% could be supported and is inline with projections made by the likes of IHS.
IHS expects global PV installations in 2015 to be between 53GW to 57GW, indicating a growth range of 16 to 25% over its guided 2014 installation figures.
BNEF has forecasted installs to reach 58.3GW in 2015, while Mercom Capital guided 54.5GW.
However, this raises potential issues over PV manufacturing capacity expansions that were announced and 2014 and those yet to be potentially announced by major tier one suppliers in 2015.
According to PV Tech’s recently released analysis of effective capacity expansion plans in 2014, around 10.8GW of new c-Si PV module capacity was announced, while around 4.5GW was actually installed and operational.
Although PV module overcapacity has been significantly reduced in the last 18-months there would seem to be a fragile balance at play between polysilicon supply, PV module capacity expansions and downstream global market demand in 2015.