Chinese Solar Companies Next To Go Belly Up


By Abhishek Shah

China, which is the world’s largest provider of solar panels made from crystalline silicon, is seeing a large number of smaller polysilicon companies go bankrupt or stop production.
The reason is that for many of the smaller companies, the price of polysilicon is $25-30/kg, while costs are $40-50/kg. This means that the smaller companies are making massive losses with the production of each kg of polysilicon. Note: Polysilicon is a commodity industry like the memory industry, and goes through periodic ups and downs when prices go below costs.
In recent years a large number of companies set up polysilicon plants to benefit from the massive growth in solar panel demand in Europe. However, a huge glut in 2011 led the prices to fall across the supply chain of silicon solar panels. Poly prices fell from a high of $100/kg to $25/kg – a drop of almost 75% in one year.
This has made many of the smaller poly plants in China stop production as the price is below variable costs. The bigger producers like GCL , Renesola and Daqo have lower costs at around $25-30/kg, which means they are breaking even. However, for smaller companies the situation is dire as massive capacity expansion by the top polysilicon producers will continue in 2012 keeping prices at around the same level.

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