Chinese Polysilicon Firms Face Potential Problems

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Researched by Industrial Info Resources (Sugar Land, Texas)--Recent reports show China's rapidly developing polysilicon industry is facing pressure from overproduction, environmental issues and increased costs. In the past decade, solar cell production has grown 33% and is continuing to accelerate. In 2007, global demand for solar grade polysilicon was roughly 34,000 tons. In 2008, this number has risen to 45,500 tons. At the same time, the price of polysilicon has skyrocketed from $20 a kilogram in 2002 to $400 a kilogram.

The high profit and prospects of polysilicon attracted Chinese firms to expand production. By February, eight companies had planned investments in the polysilicon industry totaling $788.3 million, with a capacity of 46,500 tons. Additionally, four 1,000-ton production projects were recently approved.

China's annual capacity of polysilicon is estimated to reach 30,000 tons in 2010. After that, when most current construction is finished, China's polysilicon industry will face a capacity surge, representing about 120,000 tons per year of polysilicon.

By then, the supply will be more than sufficient, and prices may drop sharply. This will be good news for solar cell manufacturers, especially those that produce their own polysilicon. At the end of 2007, China's solar cell production capacity was 1,088 megawatts (MW) per year, making it the world's largest solar cell producer. Reports show that 90% of China's solar cells are exported, mainly to Germany and Spain.

Currently most of China's polysilicon factories do not fully adhere to environmental requirements, producing the byproduct silicon tetrachloride, which is highly toxic to the environment. Producing 1,000 tons of polysilicon will generate 8,000 tons of silicon tetrachloride. In 2010, if China's polysilicon production reaches 20,000 tons, then a total of 160,000 tons of the toxic material will need to be safely discarded.

Chinese polysilicon factories do not use advanced techniques to produce low-cost and clean products. The modern Siemens technique is used by several companies in the United States, Germany and Japan and provides a much cleaner means of polysilicon production. Chinese firms use another technique from Russia, which is far behind the Siemens technology. Unfortunately, some factories simply pour the silicon tetrachloride into the soil, seriously affecting people's health.

Another problem facing Chinese firms is the cost of power. With the Russian technique, producing 1 kilowatt of solar cells consumes 10 kilograms of polysilicon and 5,800 to 6,000 kilowatt-hours of power, up to twice as much as the Siemens technique. The high state-controlled power prices in China will surely have a dampening effect on the polysilicon industry.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.