The price of the material from which most conventional solar panels are made is going to continue to plummet, reports Bloomberg
The price of polysilicon is expected to drop nearly 40 percent from its already rock-bottom price of $33 per kilogram today to $20 per kilogram after 2012, according to an analyst at HSBC Bank quoted in the Bloomberg report. Three years ago, the price of polysilicon was $435 per kilogram.
The price decline is directly attributable to a corresponding increase in the supply of the raw material. In 2011, the global industry produced 20 percent more polysilicon than the year before. In 2012, that number is expected to grow again up another 28 percent.
That, in turn, is anticipated to result in a dramatic thinning of the entire raw materials industry, with up to two-thirds of the world’s 66 polysilicon producers being either forced to merge or going out of business, according to analysts in the Bloomberg report.
One country will be hit worst of all by the glut, specifically, the one that has prized itself on cheap manufacturing: Up to 90 percent of China’s 35 polysilicon producers, accounting for over half of the country’s total output, could halt production due to the increased supply, the report notes.
Chinese polysilicon producers have gotten themselves into an unwinnable arms race with European and American polysilicon producers, according to Taiwanese news website Want China Times.
Though China achieved record levels of exports in the three months from July through September, according to the China Customs department, the amount of polysilicon exports for the first three quarters of 2011, 49,000 tons, is roughly the same as the number of exports, over 48,000.
Meanwhile, in the United States, the harsh business reality of a polysilicon oversupply is already changing business plans for at least one of the three American polysilicon companies.
The country’s and the globe’s biggest polysilicon producer, Hemlock Semiconductor Group, announced on Thursday that it was delaying plans to open a new facility in Tennessee in 2012 and cutting an unspecified number of 2,500 contractors scheduled to work on the project, Bloomberg reported.
That plant would’ve expanded the company’s polysilicon production capacity by 28 percent.
