Polysilicon import surge suggests Chinese H1 solar boom, says Bernreuter Research

Daqo's new production facility will eventually boost its polysilicon output by 18,000 MT.

China is headed for a first half (H1) solar installation surge that will likely reach the installation volumes seen in 2016, according to analysis of polysilicon import volumes conducted by Bernreuter Research.

Between October and November 2016 polysilicon imports jumped 56% from 8,680 metric tons (MT) to 13,584 MT, and then reached a record monthly high of 14,449 MT in December. This spike points to a forthcoming “Chinese PV rally”, says Polysilicon Market Outlook 2020 author and head of Bernreuter Research Johannes Bernreuter.

Contrast that data to the same period in 2015 and there are interesting parallels. Imports of polysilicon into China in October 2015 were at a low of 7,504 MT, but the following month had increased by 33.6% to reach 10,028 MT.

The forthcoming FIT cut scheduled for June 30 2016 was the driver behind this sharp spike in demand, and history looks to be repeating itself: on July 1 this year there will be a further FIT cut in China, prompting the upper part of the PV value chain to ready the ground for an H1 solar blitz that could well surpass the record 20 GW installed in H1 2016.

Bernreuter says that part of the reason for this increase in Chinese polysilicon imports reflects low domestic output, particularly in September and October last year. As the polysilicon spot price collapsed, a number of Chinese producers idled their plants as they waited out a recovery in prices, which duly arrived at the end of the year as prices crept up from the historic lows of $12.65 kg in early October to $16 kg currently. Indeed, by December Chinese polysilicon production had recovered, reaching 18,000 MT for the month.

“These data signal a strong polysilicon demand,” Bernreuter said. China has proven a profitable market for Korean polysilicon producers in particular, with the three leading suppliers – OCI, Hankook Silicon and Hanwha Chemical – cornering 50% of the Chinese market in 2016. Low import duties of 2.4% and 2.8% have benefited OCI and Hankook respectively, said Bernreuter.

Meanwhile, duties of between 53% and 57% have been levied on U.S. providers, all-but shutting these suppliers out of the lucrative Chinese polysilicon market. Germany’s Wacker remains the only Western supplier to sell directly into China.

Could similarly restrictive tariffs soon be applied to Korean suppliers? Given the high market share and record import volumes, Chinese manufacturers have rounded on their Korean rivals and accused them of a dumping margin of approximately 34%. The Chinese Ministry of Commerce is poised to hear a mid-term review of the current duty rates shortly.

“Chinese producers are now fueling speculation on higher duty rates for Korean imports in order to drive up the spot price,” said Bernreuter, who expects prices to increase closer to $17 kg over the first half of the year.