Principal photovoltaic analyst at IHS iSuppli Henning Wicht has told pv magazine that while the world’s biggest polysilicon producers OCI, Wacker, GCL Poly and HSC may continue to expand production by offsetting any associated losses against longer-term gains of expanded market share, smaller players had no such luxury.
Against the backdrop of a polysilicon price that continues to fall, IHS iSuppli Deutschland’s Wicht stated, "Tier 1 suppliers will continue to expand production at planned levels, although with slight delays because there is a fear of losing market share."
However, he continued, "We expect the five Tier 2 suppliers will hold production at 2012/2013 levels and given that the cost levels are not working any more with these price levels, we expect one of them to drop off."
Looking at the current market situation, however, it may not be too difficult to figure out whose prospects are fading.
It was among the 20 to 30 Tier 3 suppliers defined as producing less than 15,000 tons per year of polysilicon that the analyst made the starkest prediction.
"When capacity is reduced, costs become less competitive," said Wicht, "so those suppliers that survive are likely to have an internal market to purchase their polysilicon. The other option is to invest in new technology to become a lowest cost technology leader but that requires capital and these suppliers have already been losing money for 12 months.
"Investors would have to come forward to back such a plan and we can only see that happening in markets like the Middle East, Korea and parts of China where there is a long term strategy for solar in place. Maybe half of the tier 3 suppliers will still be around when the price of polysilicon picks up."
IHS iSuppli’s data showed an average spot price of US$17/kg for polysilicon in October with contract prices averaging out at $24/kg. The consultancy is predicting a year-end spot price of $17.5/kg with the contract price set to fall further to $23/kg.
The billion-dollar question is when the uptick in price will take place and Wicht is predicting that the situation will improve from the second half of 2013 onwards, driven largely by demand from emerging solar markets in South East Asia, the Middle East and immature European markets like Turkey and Poland.
These countries are among those classed as Rest of the World by IHS iSuppli.
"Countries with large populations, stable political systems and a lack of natural resources like coal, oil and gas will be the global demand drivers," added Wicht.