Polysilicon will skyrocket! Downstream pressure is high

On August 18, affected by the flood disaster in Sichuan Province and the flood prevention emergency warning, Yongxiang Polysilicon Company, which has a polysilicon production capacity of 20,000 tons in Leshan City, Sichuan Province, took emergency measures and stopped all production lines in an emergency! It is reported that the specific resumption time has not been determined. At present, floods are spreading in the area where the company is located, and some of the company's factory buildings are flooded. The polysilicon product market may soar!

In addition, according to Shenghe Resources' announcement, Wutongqiao District, Leshan City, where the holding subsidiaries Leshan Shenghe Rare Earth Co., Ltd. and Sichuan Runhe Catalytic New Materials Co., Ltd. are located, suffered a once-in-a-century flood on August 18, 2020, and the factory water level was deep. At present, the factory has all stopped production and all personnel have been evacuated safely.

There has been heavy rain in Sichuan recently and floods have occurred in many places!

On the evening of the 17th, Ya'an City along the Qingyi River was hit by a once-in-a-century flood. Leshan is located at the confluence of Minjiang River, Dadu River and Qingyi River, and many areas in the central city are seriously flooded. After being hit by the floods, land-based enterprises along the river were the first to bear the brunt, and Shenghe resources suffered heavy losses.

According to the announcement, Leshan Shenghe expects to lose 240 to 330 million yuan, of which 20-50 million yuan in fixed assets such as machinery and equipment, factory buildings, and 220 to 280 million yuan in inventory losses. Runhe Catalysis is expected to lose 150 to 190 million yuan, including 120 to 130 million yuan in inventory and 30 to 60 million yuan in fixed assets such as machinery and plant. This is still the result of rough estimation. Due to the deep water level in the plant area, personnel access is restricted, and it is not yet possible to make accurate statistics on the amount of loss.

Yongxiang Polysilicon Co., Ltd., also located in Wutongqiao District, Leshan, is a subsidiary of Tongwei Co., Ltd., and it also suspends production due to the emergency management of the local government.

It is understood that the total production capacity of Yongxiang polysilicon is 80,000 tons, and the production capacity of the plant is 20,000 tons. Yongxiang Polysilicon Co., Ltd. took emergency measures and stopped production of all the production lines. According to news, the specific resumption time has not been determined. At present, floods are spreading in the area where the company is located, and some of the company's factory buildings are flooded. The polysilicon product market may soar!

Industry insiders pointed out that in July this year, there were two polysilicon companies in Xinjiang. Daquan New Energy and GCL Silicon stopped production due to emergencies. Oriental Hope is undergoing maintenance. This time, it encountered the suspension of production by the leading polysilicon company in Yongxiang. It may lead to a gap in market supply. Polysilicon prices seem to be inevitable, and may exceed 120 yuan/kg. At the same time, the downstream photovoltaic industry will be under great pressure.

According to data, Tongwei shares (600438): a double leader in silicon materials and solar cells, and its subsidiary Yongxiang is one of the earliest companies engaged in the research and production of solar-grade polysilicon technology, and its subsidiary Hefei has the world's leading solar cell capacity and output. The company focuses on polysilicon and solar cells, and is also committed to the construction and operation and maintenance of terminal power stations such as "fishing and light integration".

Since August, the price of polysilicon has continued to rise due to the tight supply and the enlargement of purchases by downstream silicon wafer manufacturers. As of August 17, polysilicon has increased by 38.85%. At present, the domestic market price of polysilicon solar grade primary materials has reached the price range of 60,000 CNY/ton to 65,000 CNY/ton, and the price of imported materials has also reached the range of 65,000 CNY/ton to 70,000 CNY/ton.

Xue Jinlei, an analyst at the Business Club, believes that tight supply is an important reason for the surge in polysilicon prices. Since July, the supply shortage of the polysilicon market has gradually become prominent. After August, many domestic polysilicon devices are still in the maintenance period. According to relevant statistics, domestic polysilicon production fell 15% to 20% month-on-month in July. As of August 17, 4 of the 11 domestic polysilicon companies are currently under maintenance.

Xue Jinlei pointed out that in the next three quarters, polysilicon is still in a tight supply situation, and prices may continue to rise. However, as the overhaul period approaches and overseas devices gradually recover, the tight supply of polysilicon is expected to ease in the medium term. Prices will gradually return to rationality.

According to industry insiders, at present, my country's polysilicon market has formed an industrial structure dominated by five leading companies, namely Tongwei, GCL-Poly, Daqin Energy, Xinte Energy, and Eastern Hope. There are altogether 11 polysilicon production enterprises nationwide, among which 4 are in Xinjiang that are undergoing maintenance. As of the end of 2019, there were 6 domestic polysilicon companies with production of more than 10,000 tons, and their output was about 287,000 tons, accounting for 83.9% of the total output. In 2019, my country's polysilicon production reached 342,000 tons, a year-on-year increase of 32.0%. In the first half of 2020, the output of polysilicon was 205,000 tons, a year-on-year increase of 32.3%.

The rapid rise in the cost of PV in the upper and middle reaches also has a serious impact on the terminal battery. According to the industry's response, the price of polycrystalline cells has not increased significantly, and the cost pressure is relatively high. The price has already approached the manufacturer's cash cost.

It is reported that the surge of upstream products in the photovoltaic industry chain such as polysilicon has directly caused the downstream companies including terminal battery products to feel pressured. Some downstream companies complain that the increase in raw material prices has already forced the manufacturers' sales prices. The most uncomfortable is the component companies, some small component factories may stop production due to this wave of price increases.