There is a \"virtual overcapacity\" in China’s polysilicon industry”

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Since the second half of 2006, investment in polysilicon across China has been on the rise, and to date, the capacity built amounts to nearly 50,000 tons. However, there is a huge disparity between the installed capacity of polysilicon and the actual output of qualified products, resulting in a \"virtual overcapacity\" across the industry. 　　Lv Jinbiao, deputy general manager of Jiangsu Zhongneng Silicon Industry Development Co., Ltd., one of China’s largest polysilicon producers, explained: “At present, the vast majority of domestic polysilicon production facilities use the modified Siemens process. Similar to large chemical enterprises, going into operation and reaching full capacity are two different things; it’s already good if a facility can reach full capacity after one and a half years of operation.” Except for a few projects that were put into operation before 2008 and which have achieved production rates of 60%–80% this year, the other projects that were launched this year, including a large portion of those that started operating in the second half of the year or at the end of it, have produced only limited amounts. ” 　　CEC PV is one of China’s major solar cell manufacturers. Yang Fangshao, the company’s deputy general manager, also said, “Although domestic polysilicon production capacity has long exceeded the demand of downstream enterprises, the actual output is insufficient.” Imported polysilicon still accounts for a significant proportion of the polysilicon used in the domestic solar cell production process. ” 　　According to industry experts, factors such as the system integration efficiency of the production line, module technology, the design optimization of key equipment like reduction furnaces and distillation towers, and whether by-products are utilized in a closed-loop manner effectively, all directly affect the time it takes to reach full production capacity as well as the level of productivity achieved. Coupled with the sharp drop in polysilicon prices this year, projects where costs exceed market selling prices have stopped production or reduced output to minimize losses; as a result, China’s polysilicon production this year will not exceed 15,000 tons. 　　This year, China is expected to consume nearly 30,000 tons of polysilicon. At the current level of technology, the photovoltaic industry requires approximately 7.5 kilograms per kilowatt of polycrystalline material. This year, China’s production of photovoltaic cell modules was approximately 2,600 megawatts, with around 19,500 tons of polysilicon being consumed. In addition to components, Chinese companies have directly exported a large amount of silicon wafers and solar cells, consuming over 10,000 tons of polysilicon. 　　According to publicly available data from various companies, the large-scale polycrystalline silicon production projects in China that have been announced thus far include: Jiangsu Zhongneng with a production capacity of 18,000 tons, Jiangxi Sunwoda with 5,000 tons, Luoyang Zhongsilicon with 3,000 tons, Qinghai Asia Silicon Industry with 1,000 tons, Yangzhou Shunda with 1,500 tons, Ningxia Sunshine with 1,500 tons, Hebei Yingli with 3,000 tons, Zhejiang Zhongning Silicon Industry with 1,500 tons, and 6 projects in Sichuan Province led by Xinguang Silicon Industry, with a combined production capacity of 13,000 tons. The cumulative production capacity of the aforementioned projects has reached 47,500 tons.