Specialist materials market research firm, Bernreuter Research expects polysilicon prices to rise in the first half of 2014 but end the year below the low levels set at the end of 2013.
In its most recent market report, ‘The 2014 Who's Who of Solar Silicon Production’, Johannes Bernreuter, head of Bernreuter Research and report author, noted that global polysilicon output in 2013 decreased to approximately 228,000MT, a 4% decline from 238,000MT in 2012.
Production reductions over the last few years have been driven by a major collapse in polysilicon prices due to chronic overcapacity. A significant number of small producers exited the market as spot market prices fell below production costs. Many of the major players halted further capacity expansion plans and lowered utilisation rates.
“Although shutting down capacities of approximately 135,000 metric tons (MT) since 2011 has solved the oversupply problem in the short term, new entrants and re-commissioned Chinese plants will again tip the supply-demand balance in 2015 at the latest,” said Johannes Bernreuter.
In the short term, due to the boom in PV demand of around 36GW, according to recent reports from NPD Solarbuzz, polysilicon inventory levels are being reduced.
Relying on recent PV market demand forecasts from leading research firms, Bernreuter noted that in a high demand scenario, the polysilicon spot price could increase from the current US$18/kg range to a bandwidth of US$21/kk to US$24/kg in the first-half of 2014.
However, Bernreuter cautioned that in a base-case demand scenario, supply/demand imbalances would contain polysilicon price increases below the US$20/kg mark.
New capacity and impact on pricing
According to Bernreuter Research, as much as 66,000MT of new low-cost polysilicon capacity is expected to come on stream in 2014, potentially halting further price increases, despite strong market demand projections recently from the likes of NPD Solarbuzz, Deutsche Bank and Yingli Green.
Interestingly, Bernreuter projects that roughly one third of the new capacity expected to come on stream this year would be based on FBR (fluidised bed reactor) technology using monosilane as the feed gas.
Technical developments in FBR technology have focused on both reduced production costs and higher purity levels, which now have the ability to put the traditional Siemens process under competitive risks but also, according to Bernreuter, will play a part in keeping polysilicon prices low.
“At least over the next three years, spot prices of US$25 or even US$30/kg, which some industry player’s dream of, will remain a Fata Morgana,” added Bernreuter.
Therefore polysilicon prices are set for a roller-coaster ride with prices climbing in the first half of 2014 but are expected to retreat below the US$18/kg level at the beginning of the year to around US$16/kg by the end of 2014.