Polysilicon companies suspend production intermittently – a prelude to industry reshuffle

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Recently, there have been reports that some polysilicon manufacturers in Sichuan Province have suspended production intermittently. A responsible official from the Machinery, Metallurgy, and Building Materials Department of Sichuan Province’s Economic Commission revealed that they are drafting documents for the provincial authorities regarding the sharp drop in silicon prices, with a request to take measures to \"stabilize the market\". 　　Jiang Qian, the leading researcher in the energy sector at CIC Consulting, pointed out that although the above data merely reflect the current situation of Sichuan’s polysilicon industry, as a major province for polysilicon production in China, the current state of Sichuan’s polysilicon industry can be considered a reflection of the overall situation of China’s polysilicon industry. The consequences of excessive capacity resulting from blind expansion are gradually becoming apparent, and the intermittent shutdowns of some polysilicon manufacturers may merely be the beginning of a new wave of problems. And this round of storms represents a major reshuffle in China’s polysilicon industry. 　　Starting from the second half of 2006, the concept of polysilicon gradually gained momentum in China, with many listed companies entering this field. Despite the economic crisis in 2008, many companies still expanded their production despite the difficult circumstances. According to the latest \"Report on Investment Analysis and Future Prospects of China’s Polysilicon Industry from 2009 to 2012\" released by CIC Consulting, the total investment in polysilicon projects in China since 2006 has reached 44 billion yuan. In addition, there are currently over 20 polysilicon projects under construction in our country, with a total investment of over 70 billion. 　　Taking Sichuan Province as an example, its polycrystalline silicon production was only around 700 tons in 2007; by 2008 this figure exceeded 2,000 tons. In the cities of Leshan and Ya’an alone, the existing and under-construction polycrystalline silicon production capacity already exceeded 5,000 tons. Meanwhile, polysilicon projects are continuing to be launched. The construction of Tianwei Sichuan Silicon Industry’s 3,000-ton/year polysilicon production facility, for which 2.7 billion yuan has been invested, is now in its final stages. The overall development plan for the Sichuan Guangyuan Silicon Industry Park has been basically finalized. The first phase of the project will involve the construction of a semiconductor-grade polysilicon production line with an annual capacity of 3,000 tons, and construction of the first facility in the park is expected to begin in November 2009. In the first half of 2010, the Dongqi Eban 1,500-ton project, the Ledian Tianwei 3,000-ton project, and the Tianwei Sichuan Silicon Industry 3,000-ton project are expected to be completed and put into operation. 　　Along with the boom in domestic polysilicon investment, the weighted average price of international polysilicon forward contracts in 2009 dropped by 30% compared to 2008, to 107 dollars per kilogram, while the spot price fell below 60 dollars per kilogram by May 2009. In China, the cost of polysilicon generally ranges from $50 to $70 per kilogram, while for companies that do not use closed-loop production methods, the cost can reach as high as $100 per kilogram. This means that the profits of domestic polysilicon companies are already quite slim, and some are even operating at a loss. Enterprises may be able to tolerate this situation in the short term, but if it persists for a long time, they will have to choose to withdraw. 　　To better study and analyze the conditions of the silicone market and its future development, thereby serving the enterprises in the silicone industry, the \"2009 International Summit on the Development of Fluorosilicone Fine Chemical Industry\" will be held from July 28 to 31 in Shaowu, Fujian. Organized by the people’s government of Shaowu City, Fujian, and co-organized by China Chemical Network under Wangsheng Business Bao, together with the Economic and Trade Bureau of Shaowu City and the Development and Reform Bureau of Shaowu City, this summit will engage in interactive exchanges with various industry stakeholders in order to facilitate meaningful exploration and advancement for the development of the entire industry.