Structural upgrading of the polysilicon industry is conducive to its healthy development

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Structural upgrading is essential for the healthy development of the polysilicon industry. Publication date: October 13, 2010. Source: China Nonferrous Metals Network – an authoritative media platform for the nonferrous metals industry. News from October 13: At the beginning of 2010, the Ministry of Industry and Information Technology formulated the \"Access Standards for the Polysilicon Industry,\" but to this day those policies have not yet been issued. The reason is that this standard draws on the advanced benchmarks of the international polysilicon industry; it requires that new polysilicon production projects have a capacity of at least 3,000 tons per year, and that by the end of 2011, polysilicon production facilities with a comprehensive power consumption of more than 200 kWh per kilogram must be phased out. Many domestic companies are unable to meet these requirements, which is why they oppose them. Recently, Gao Hongling, deputy secretary-general of the China Photovoltaic Industry Alliance, also warned that investment in polysilicon is on the rise globally, and Chinese companies should be cautious to avoid overproduction due to reckless expansion. It is evident that the blind expansion of Chinese enterprises has had a significant impact on the polysilicon industry, and the polysilicon industry itself faces numerous problems. 　　Various factors have slowed down the growth in demand for polysilicon, while at the same time its supply has expanded on a large scale. According to statistics, global polycrystalline silicon production in 2010 could reach 125,000 tons, of which 97,000 tons were intended for use in solar energy applications. However, the demand for polycrystalline silicon for solar purposes in 2010 was 83,000 tons; by the end of that year, there would be an oversupply of polycrystalline silicon for solar use. As the shortage of polysilicon supply decreases, spot prices will quickly converge toward long-term contract prices. Industry experts expect the market price of polysilicon to drop by about 50% in 2009 ； Since July 22, 2010, the price of polysilicon in the domestic market has risen from 400,000–415,000 yuan per ton to 440,000–460,000 yuan per ton, with a trend toward supply shortages. According to experts’ forecasts, domestic silicon prices are likely to rise further in the short term to 500,000 yuan per ton (62.5$/kg). By the end of 2010, the spot price would be roughly on par with the long-term contract price, at around $60 per kg; some analysts even predicted that the price of polysilicon would drop back to $40 per kg. 　　Problems in China’s polysilicon industry 1. Excessive blind expansion at a low level The fantasy of getting rich overnight attracted many people from various backgrounds and industries in China to the field of photovoltaic power generation. Naturally, the highly profitable polysilicon sector also caught the attention of investors driven by a strong desire for profits, resulting in a large amount of capital being invested in polysilicon production. Among the many companies that have entered the polysilicon production sector are those in the traditional energy and energy equipment industry, such as Dongfang Electric, Leshan Power, and Minjiang Hydropower ； Downstream photovoltaic enterprises, such as Jiangxi Sunwoda and Jiangsu Zhongneng, which are manufacturers of photovoltaic cell modules and system integrations ； It also includes non-energy companies. Overall, the first two entered this industry primarily to adjust their overall structure or to establish a complete industrial chain, showing a certain degree of planning and strategy ； On the other hand, non-energy companies entering this sector are more focused on the profits associated with polysilicon production and their assessment of the development trends in the new energy industry; they lack expertise in the photovoltaic industry. The substantial investment of funds from various sources has made repeated construction and blind expansion at a low level an inevitable outcome in some areas. 　　2. The manufacturing processes used are still not mature. Most of the polysilicon production projects launched in China employ the modified Siemens process; the electricity consumption per kilogram of product is over 300 kWh, with the cost at around 450 yuan per kilogram ； Meanwhile, the cost for international giants is below $30 per kg. Based on the production cycle of polysilicon, polysilicon projects that came online at the end of 2008 and the beginning of 2009 would not reach 80% of their capacity until two years later. The day when domestic companies reach full production capacity also marks the end of the huge profits associated with polysilicon; they will once again face a competitive market where quality and price determine success. Based on the above analysis, by the end of 2010, the market price of polysilicon is likely to fall below the production costs of Chinese companies. Therefore, if companies fail to upgrade their technology, reduce the production costs of their products, or make efforts to improve conversion efficiency, they will be mercilessly eliminated in future competition. 　　There are also some projects that use metallurgical methods to produce polysilicon. The metallurgical method has advantages such as low cost, short construction period, and no chemical pollution. However, to date, the production of polycrystalline silicon using metallurgical methods in China remains limited to research and small-scale experiments. The products produced do not meet the quality standards required for solar-grade silicon; they also have poor stability and suffer from significant degradation over time. Moreover, if metallurgical methods are to be used for large-scale production, the investment required, taking into account factors such as the removal of impurities like boron, is even greater than that needed for the improved Siemens process. 　　After nearly 10 years of development, the domestic improved Siemens process now has the capability for large-scale production. Once this process becomes more mature and costs decrease, it remains to be seen how much room there will still be for the metallurgical method to survive. 　　3. There are potential risks regarding safe production and emissions. How to handle the exhaust gases generated during polysilicon reduction is one of the key technologies in polysilicon production. At present, the vast majority of polycrystalline silicon manufacturers worldwide use the closed-loop modified Siemens process to produce polycrystalline silicon, and this technology can basically meet environmental protection requirements; however, it remains an unexplored area in China. In China’s polysilicon production, aside from Luoyang Zhongsi High-Tech Company which uses independently developed technology, most other companies either directly or indirectly adopt Russian polysilicon purification technologies, such as Nanbo and Jiangsu Zhongneng, or improve upon those Russian technologies, such as Xinguang Silicon Industry and Dongfang Electric. However, compared to international advanced technologies, these technologies still have certain shortcomings in terms of large-scale production, closed-loop production, and product energy consumption. At present, most polysilicon manufacturers in the country handle the by-product silicon tetrachloride by selling it to chemical plants that require this material as a raw material. However, the growth rate of enterprises that need silicon tetrachloride is far slower than that of polysilicon manufacturers; therefore, if excess silicon tetrachloride cannot be dealt with effectively, these polysilicon manufacturers will face severe penalties. Furthermore, the production of polysilicon involves a large amount of flammable and explosive gases; poor management by companies can lead to leaks of toxic gases and explosions, posing safety risks for many companies that lack advanced technical capabilities. 　　While building new facilities and expanding production capacity, polysilicon companies need to upgrade their industrial structure, paying attention to the following points: 1. Technology should be given top priority, with increased investment in research and development of various polysilicon production techniques. Polysilicon products have two main uses: one is in the manufacture of solar cells, and the other is in integrated circuits. The performance parameters required for polysilicon products vary depending on their intended use; electronic-grade polysilicon requires a purity level of 9N to 11N ； On the other hand, solar-grade cells do not require such high purity of polysilicon – roughly 6N to 7N is sufficient – as long as their photoelectric conversion efficiency and lifespan are maintained. Different parameter standards result in varying methods for producing polysilicon for various applications; electronic-grade polysilicon is generally produced using costly chemical methods, primarily the modified Siemens process ； For solar-grade polysilicon, some physical methods can be used to reduce production costs. Currently, for the production of solar-grade polysilicon, in addition to the improved Siemens method, there are also metallurgical methods, silane methods, and fluidized bed methods. 　　The main gap between China and foreign countries lies in polysilicon production technology. The improved Siemens process used abroad has been fully developed, but it remains under the control of a few large companies, which impose a technological blockade on China. Therefore, we should concentrate our scientific and technological resources to jointly develop and establish an overall framework for China’s polysilicon industry, including technical routes, processing methods, as well as environmental protection and comprehensive utilization strategies. In addition to adopting the mature Siemens process for polysilicon production, we should intensify efforts in researching and developing other polysilicon production methods such as the fluidized bed process and the metallurgical process. For different markets, various process technologies should be developed, creating a technical landscape in which they compete with one another while also coordinating their development to meet appropriate objectives. 　　2. Strengthen strategic cooperation with downstream battery manufacturers. Polysilicon projects are high-risk initiatives that require substantial investment, complex manufacturing processes, long construction periods, and a high likelihood of environmental incidents; success can only be achieved through careful design, meticulous construction, and strict management. Due to these particularities, especially technical risks, it is essential to ensure ample funding for the financing of polysilicon projects. To mitigate market risks, polysilicon producers can strengthen cooperation with manufacturers in the downstream supply chain through joint ventures, equity participation, and the signing of long-term supply contracts. 　　3. Enterprises should carry out independent research and development efforts. In order to prevent the uncontrolled expansion of polysilicon manufacturers, it is necessary to conduct research on key polysilicon technologies, comprehensive utilization methods, and environmental protection by establishing corporate R&D centers or by collaborating with universities and research institutions. Increased investment in R&D is needed to develop new processes, technologies, and equipment independently in China, thereby reducing production costs. If China’s polysilicon manufacturing technology can reach or exceed international advanced levels, it will be able to gain an advantage in the fierce market competition that lies ahead. 　　4. Sino-foreign joint ventures to build polysilicon plants Building polysilicon plants requires advanced technology and substantial capital. In recent years, there has been an increasing number of cooperative and joint venture projects between companies, which have gradually become a trend in the development of the global silicon materials industry. Furthermore, in line with the needs of the polysilicon market, **joint ventures between domestic and foreign companies to build polysilicon plants should be encouraged and supported. The advantages of this approach are that it helps to share the huge investment costs, thereby reducing financial pressure and investment risks in the country ； Second, it is to share advanced technological achievements in order to rapidly narrow the gap between China’s silicon materials industry and international standards ； Third, leverage the brands of international corporations to enter international markets, thereby gaining a strong competitive edge. 　　Restricting small enterprises and projects with high energy consumption and high pollution levels is conducive to the healthy development of the industry. Although solar photovoltaics represent a new source of energy, the production process of its raw material, polysilicon, is highly energy-intensive and polluting. It is understood that the production of polysilicon generates highly toxic pollutants such as silicon tetrachloride, and the overall electricity consumption throughout the process from producing industrial silicon to solar cells is approximately 2.2 million kWh per megawatt. In our country, 98% of solar cells are used for export, which means a large amount of this scarce energy is being sent abroad.