Market research firm GTM Research expects around 130,000MT of polysilicon production to come on stream in the next few years, equivalent of 25GW, which could impact pricing.
GTM Research said that cumulative global polysilicon supply capability was expected to reach 437,000MT by 2016, enough to support 85GW of c-Si module production.
“After enduring a traumatic period of sustained overcapacity and price troughs in 2011-2013, the global polysilicon market has rebounded strongly in 2014,” said report author and GTM Research Lead Upstream Solar Analyst, Shyam Mehta. “A sustained uptick in pricing and renewed confidence in end-market growth have spurred the resumption of capacity expansion plans as well as restarts at a number of previously shuttered plants.”
Polysilicon supply and demand has been in balance throughout 2014, resulting in stable pricing above US$20/kg but has not climbed above US$25/kg, which in the past would have attracted higher cost producers to restart production.
However, Mehta said that some plants such as those owned by Hankook Silicon, Elkem and LDK Solar are back in operation. This at a time when low-cost producers such as REC Silicon, GCL-Poly, Daqo New Energy and TBEA Xinjiang have plans to build new plants, some such as REC Silicon using next generation FBR technology.
Although FBR-based polysilicon holds the lowest manufacturing costs, Mehta believes the limited number of producers with the knowledge and experience in operating such technology would limit FBR to around 20% of global production by 2018.
According to the report the average PV wafer silicon utilisation is expected to reduce from 5.3 grams per watt (g/W) in 2014 to 4.7 g/W by 2018, with best-in-class producers expected to be at around 4.1 g/W.
This would support silicon costs at the module level of US$0.07 to US$0.08 per watt by 2018, down from to US$0.10 to US$0.12 cents per watt in 2014.
Mehta calculated that polysilicon would account for 18 to 25% of total module manufacturing costs for leading Chinese manufacturers, down from around 50% before 2009. Despite the significant reduction, polysilicon remains the single largest cost to PV module production.
Although the polysilicon sector had seen a significant consolidation phase when ASPs plummeted due to weaker demand and chronic overcapacity, Mehta cautioned that new entrants would mean expansion in the number of producers.
“A slew of new entrants are poised to join the market, making for a dynamic, multi-tiered competitive landscape which we expect to become less, not more, consolidated in the medium-term,” Mehta said.