**After a Challenging 2012, Will the Polysilicon Market Improve in 2013?**
Following a tough year in 2012, many are wondering if the polysilicon market will see better prospects in 2013. Drawing on insights from suppliers and industry analysts, this article offers a detailed look at the state of this critical and rapidly changing market.
**2012: A Year of Decline and Restructuring**
The year 2012 was marked by severe overcapacity, which led to a sharp drop in spot prices. In 2011, prices fell by 60%, and by early 2012, they hovered around $30 per kilogram. By the end of the year, prices dropped further to around $20 per kilogram, and even briefly touched $15 before stabilizing in December.
With production costs exceeding selling prices, it’s expected that over 100 small-scale producers will undergo major restructuring, particularly in China. Many companies have been forced to scale back or halt operations, with only a few like GCL-Poly, Daqin, and Asia Silicon continuing to produce.
As major players shut down facilities to reduce costs, they’ve also revised their supply contracts and worked to clear inventory. However, many manufacturers still face a gap between cost reductions and falling selling prices, which could worsen if polysilicon prices don’t stabilize.
**Polysilicon Industry in Crisis**
In December 2012, a Chinese industry report revealed that approximately 90% of domestic polysilicon producers had either ceased operations or exited the sector—up from 50% the previous year. Despite prices remaining below cost levels, only a handful of firms continued production.
Imports surged by 26% in 2012 as average selling prices fell by about 61% compared to the prior year. GCL-Poly, China’s largest producer, saw its output drop significantly in Q3 2012, with shipments falling to just 657 tons—a massive decline from 5,971 tons in Q2.
Despite having a rated capacity of 65,000 tons, GCL-Poly faced losses, reporting a significant loss for the full year of 2012. Similarly, LDK Solar, with an annual capacity of 17,000 tons, shut down all its polysilicon production in the second half of 2012.
Other companies, such as Big New Energy and Renewable Energy Corporation (REC), also struggled. REC announced the shutdown of its U.S. plant but plans to increase production at its Butte facility in 2013. Hemlock Semiconductor cut 400 jobs and delayed its Tennessee plant due to trade disputes with China.
**Looking Ahead: A Mixed Outlook for 2013**
According to BernreuterResearch, global polysilicon production fell to 235,000 tons in 2012—a decrease of about 8% from 2011. This volume was sufficient to support the 33–34 GW of new PV installations in 2012.
For 2013, Bernreuter expects a 6.5% increase in production, driven by higher PV installations. If demand picks up, spot prices could rise to between $20 and $25 per kilogram by the end of the year. While Europe remains a key market, growth is expected to shift toward emerging markets like China, the U.S., and Japan.
However, challenges remain. The Chinese government recently imposed a 50% import tariff on foreign polysilicon, citing anti-dumping concerns. Major producers like Hemlock and Wacker have denied these allegations, but the move has added uncertainty.
**New Players and Ongoing Challenges**
Despite the downturn, new entrants are still emerging. Qatar Solar Technologies, for example, secured $1 billion in funding to build a large polysilicon plant in the Middle East. Meanwhile, smaller players like Daqin and LDK are investing in upgrades to bring their costs down to around $20 per kilogram.
Equipment suppliers like GT Advanced Technology remain optimistic, with polysilicon-related sales expected to account for 42% of their revenue in 2013. Mainstream producers are also pushing to reduce costs to as low as $10–$12 per kilogram, indicating fierce competition for market share.
**Technological Shifts and Long-Term Outlook**
Looking ahead, technological advancements are expected to drive demand for higher-purity polysilicon. As PV module manufacturers adopt more efficient technologies, such as n-type wafers and thinner silicon sheets, the need for high-quality material will grow.
This could lead to further consolidation in the market, pushing out smaller players who cannot meet the rising standards. While the industry may see a slow recovery in 2013, long-term growth in solar installations and ongoing cost reductions are expected to create a more stable environment through at least 2016.
In summary, while 2012 was a difficult year for the polysilicon sector, there are signs of hope for 2013. With demand expected to rise and prices stabilizing, the industry may finally begin to recover—but the road ahead remains uncertain.
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