CHEAPER AND CHEAPER SUN

Polysilicon Price Declines Will Continue Sector Shakeout, says GTM Research
Mark Osborne, January 25, 2012 (PV-Tech via PV Group)

"A new and detailed bottom-up analysis of the polysilicon industry by GTM Research further supports growing consensus that polysilicon prices will continue to set record lows in 2012 as they did in 2011 as overcapacity continues. Lower silicon prices in 2012 will likely lead to even lower c-Si module prices and force higher-cost poly producers to exit the market.

"A key consequence of continued low polysilicon prices at or below US$30/kg is expected to see module manufacturers saving approximately US$0.20 per watt, which could bring module prices below US$0.70 per watt, according to GTM Research…"

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"…[M]ajor producers that have significant scale and high-purity products will survive in a low-priced environment, while small-scale producers will struggle to sell at or below US$30/kg, forcing the vast majority to shutter operations and causing many to exit the sector completely…GTM Research expects to see established players such as Hemlock Semiconductor, Wacker, GCL Solar, REC, OCI and Tokuyama to weather this extended period of pricing weakness...

"…[O]versupply in the polysilicon market pushed the spot price of silicon down from US$80/kg in late March 2011 to under US$30/kg in December, representing a more than 60% price drop…[C]ontract renegotiations are inevitable. Average contract pricing was closer to US$50/kg in 3Q 2011, but the collapse in spot pricing will likely pull the contract pricing down sharply."