According to reports, citing LDK Solar’s President and CEO, Sam Tong the company is not planning to start polysilicon production again until the price has reached US$23/kg.
Polysilicon overcapacity has dogged the sector for over 2-years, forcing small and medium-sized producers to stop production altogether or exit the market completely.
According to a Taiwan-based market research firm, TrendForce polysilicon spot market prices stood at US$16.3/kg last week, continuing a slump in prices since the beginning of the year when prices were only around US$15/kg.
LDK Solar stopped production of polysilicon at its two plants in China in the first quarter of 2012 unable to compete with prices that fell way below production costs. LDK reported at the time that it had produced 1,900MT of polysilicon from an annual nameplate capacity of around 15,000MT at an average cost of approximately US$30.3/kg.
The company has been attempting to upgrade production facilities to reduce energy and material consumption and improve purity-levels to return to competitiveness and provide its ingot/wafer operations with in-house polysilicon production.
Major competitors such as Hemlock Semiconductor, Wacker, OCI and REC have production costs well below US$15/kg.
LDK’s executive was said to have highlighted increased demand in recent months for solar wafers, claimed to have led to a return to full-capacity.
The company had provided previous solar wafer shipment guidance for the second quarter of 2013 of between 250MW – 300MW. Annual nameplate wafer capacity was believed to be in the region of 3.2GW, resulting in quarterly run-rate of 800MW.
The pick-up in demand for its wafers in the first quarter of 2013 was said by management at the time to be due to its higher efficiency wafers due to quality improvements in processing leading to customers obtaining higher cell/module efficiencies.
Industry estimates on polysilicon pricing in 2013 have ranged from flat to mildly up (US$18/kg – US$21/kg), though PV demand has since improved with global demand estimates in the 35-39GW range, up from as low as 29GW-31GW earlier this year.
Polysilicon prices were said by China’s largest producer, GCL-Poly to have bottomed at the end of last year and would make a recovery in the second-half of 2013.
However, this would indicate that LDK Solar’s price target before production is restarted may not be achieved in 2013. The company had previously indicated in quarterly financial conference calls that it wanted to resume production as soon as upgrades to plants had been made as production costs would be competitive with rivals.
LDK Solar has been able to reduce operating costs significantly of recent quarters as it drastically cut its workforce, across polysilicon, solar cell and module production plants. Halting loss-making polysilicon production was a key contributing factor to reducing operating losses.
Reports noted that LDK Solar aimed to return to profitability in 2013 though on what financial basis such as operating profit was not clear from the reports.