Will the financial crisis bring an end to the exorbitant profits in the polysilicon industry?

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Will the financial crisis bring an end to the exorbitant profits in the polysilicon industry? “The time for a reshuffle in the industry has arrived, and it is likely that only 3 to 5 companies will remain in the end. ”Zhang Lin, a senior analyst in the new energy sector at Great Wall Securities, believes so. Previously, He Yunping, deputy secretary-general of the Silicon Industry Branch of the China Non-ferrous Metals Industry Association, estimated that there have been over 600 industrial silicon enterprises invested in in China over the years, with more than 200 of these enterprises still in operation today. If what Zhang Linyan says is indeed true, it means that hundreds of silicon industry companies will be eliminated, and nearly 100 billion yuan in investments will vanish without a trace. A price winter struck suddenly, but the industry’s winter came as a great surprise as well. “The price of polysilicon has dropped sharply; since October, it has fallen by more than 40% in just two months. ”Qu Xiaohua, president of Trina Solar, said. The sudden onset of a downturn in the industry has made the unreasonable structure of the industry even more apparent. At present, 90% of the raw materials used by polysilicon manufacturers in our country are imported. Since domestic solar energy manufacturers are unable to utilize the domestic production capacity, over 90% of the polysilicon produced by these companies is exported. Affected by the financial crisis, European and American markets began to reduce imports and seek ways to protect their own industries, which made a sharp drop in prices inevitable; Chinese polysilicon manufacturers were the first to be hit by this situation. In mid-August, Ping An Securities released a report titled \"Polysilicon Market Outlook,\" in which it was stated that by 2010, there would be an oversupply of polysilicon globally, and the price of long-term contracts for polysilicon would fall below $100 per kilogram. As the global economic situation deteriorates, some industry analysts expect the price of polysilicon to return to $40 per kilogram. New technologies are putting pressure on this sector. “The biggest bottleneck in solar film power generation technology is its low conversion efficiency. If new technologies like those in the United States can be proven to be viable on an industrial scale, they will quickly replace the current polysilicon-based approach, leading to fundamental changes in the industry.” ”He Yunping said. Regarding the competition between crystalline silicon cells and thin-film cells in solar power generation technology, more cautious venture capital firms have already made their choices – in May 2008, INVESTCO and **Weijun Investment Fund transferred all of their shares in Shunda Holdings to Suntech Power Co., Ltd. (NYSESTP), thereby withdrawing their investment and realizing a profit. Shunda Holdings was established in 2003, and its main business involves using polysilicon to produce monocrystalline silicon rods and wafers. Yinglian and Weijun invested in the company in 2006, hoping that it would go public, but the onset of the financial crisis made such an outcome unattainable. Additionally, the rise of thin-film solar power technology led venture capitalists to withdraw their investments. Meanwhile, venture capital is beginning to converge in the field of thin-film power generation. In November 2008, Intel Capital and the International Finance Corporation invested in Shenzhen Chuangyi Technology and Hebei XinAo Solar, companies engaged in the production of thin-film solar cells. Even earlier, in July 2008, Lenovo Investment also invested in Zhejiang Advanced Solar, a company that manufactures thin-film solar cells. As venture capital pulls out of the polysilicon industry, it is helping its competitors grow stronger, leaving the prospects for polysilicon looking bleak. The pending policies are nothing but empty promises; currently, price is the biggest obstacle to the development of solar energy. It is estimated that when the price of polysilicon is $300 per kilogram, the cost of polysilicon-based photovoltaic modules is around $4.39, resulting in a power generation cost of approximately $4.38 per kilowatt-hour ； If the price of polysilicon is $100 per kilogram, the corresponding power generation cost would be 2.18 yuan per kilowatt-hour, which is still much higher than the current domestic on-grid price for thermal power. On December 6, Shi Dinghuan, president of the China Renewable Energy Association, revealed at the “Shenzhen International Symposium on Renewable Energy Technologies and Investment” that the National Development and Reform Commission and the National Energy Administration are exploring policy support and subsidy measures for photovoltaic power generation, with purchases being made at an electricity price of around 4 yuan per unit. If this policy is implemented, it will undoubtedly be a major boon for the polysilicon industry.