PV Crystalox suspends polysilicon production in Germany and cuts wafering jobs in UK

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Citing some customer cutbacks in solar module manufacturing production levels and continued pressure on wafer prices that have declined more than 50% since April this year, PV Crystalox Solar is taking drastic measures to reduce cash burn in these difficult times for the global PV industry. The company is operating at a significant reduction in wafer shipments, compared to previous forecasts, job losses and short time working.

The wafer supplier announced a temporary suspension of polysilicon production at its facility in Bitterfeld, Germany, with short time working for employees.

The biggest impact will be on ingot and wafer production in the UK. PV Crystalox said in a statement that it was reducing production output, without providing further details, yet also announced that this would lead to “significant job losses in the UK.” Again, the actual number of job losses was not disclosed.

In its last business update in August, the company noted there had been a 45% price decline for wafers from May to June, 2011. However, since then, the company said that wafer prices on the spot market have decreased by more than 20%.

Though the company said this had resulted in a price decline of 50% the reality is a drop of somewhere around 65%. Price declines have been industry-wide due to weak demand and significant over capacity within the supply chain.

As a result of the worsening prices originally noted in August, the company was already operating below break-even level. The rapid and deep fall in prices have meant the company has made inventory write-downs, yet did not disclose the financial impact on its balance sheet.

With some of its customers cutting production of cells and modules in response to weak demand, especially in Germany, PV Crystalox drastically revised down shipment guidance. Shipments for the full year are expected to be in the range of 360-390MW, down from previous guidance in August of between 400-450MW. PV Crystalox shipped 378MW in 2010, but has significantly ramped ingot/wafer and polysilicon production since.

Wafer production capacity had reached a nameplate of 535MW. The company had previously said it was expanding capacity to 750MW by early 2012.

The polysilicon production plant was operating at nameplate capacity of 1,800MT, which was expected to remain fully utilized for the remainder of the year with the intention of supporting cost reduction efforts. Annual polysilicon output averaged 1,475MT during the first five months of 2011.

Despite the actions and market conditions, PV Crystalox said that it expected to “have a healthy cash balance at the end of the year.” Although, the company is continuing “to review industry conditions on an ongoing basis.”

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