China-based polysilicon producer, Daqo New Energy Corp has secured near-term polysilicon supply deals with SMSL (Solar Module Super League) member, JA Solar and an unidentified existing customer that means it is sold out until a new polysilicon plant is built and operational sometime in 2022.
Daqo said that JA Solar had secured between 32,400MT to 43,200MT mono-grade polysilicon supply from January 2021 through to the end of 2023.
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JA Solar is one of the few SMSL’s that is a fully integrated PV manufacturer and has ambitious capacity expansions plans over the next few years across wafer, solar cell and module assembly. Securing further near-term polysilicon contracts was critical to these plans.
A second, yet unidentified customer also secured a near-term supply totalling 12,000MT, operating between January 2021 and December 2022.
Longgen Zhang, Chief Executive Officer of Daqo New Energy said, “Including the volume of these two agreements, approximate 79,800MT of our polysilicon has already been booked under long-term supply agreements for 2021.”
However, Daqo had secured a major deal with leading monocrystalline wafer producer, LONGi Green Energy Technology, which was for a total of 112,800MT over a three-year period in August 2020.
The polysilicon producer had also signed contracts with SMSL, Trina Solar in November, 2020. This was a three-year contract, lasting between November 2020 and December 2023 for between 30,000MT to 37,600MT of polysilicon supply.
With many of the contracts having minimum and maximum polysilicon quantities, taking the maximum quantity levels over the contracted timelines has highlighted that Daqo is technically sold out in 2021 and through the majority of 2022.
At around 80,000MT of existing polysilicon capacity, further debottlenecking of Daqo's facilities could increase nameplate capacity but demand is still outstripping supply.
Daqo has plans to add approximately 40,000MT of new capacity from funds raised in an IPO in China for its manufacturing operations subsidiary, which requires approximately capex of around US$500 million and is planned to be operational and start ramping around mid-2022.
Management had noted in its third quarter earnings call that by the end of 2020, China would have around 160GW of mono-wafer capacity but with significant capacity expansions under way the mono wafer capacity in China could reach around 300GW.
However, the backdrop to polysilicon supply is that Daqo believes very little new capacity will come on stream in 2021 and only around 150,000MT of new capacity in China added in 2022.