New特 Energy is a polysilicon subsidiary established by TBEA in Xinjiang. It’s reported that New特 Energy’s new 36,000-ton polysilicon production capacity was commissioned in May 2019. By the third quarter of 2019, the newly operational project had already reached an output of approximately 3,000 tons per month. Once fully ramped up, the company expects its all-in costs to drop below 50,000 yuan per ton, while its total annual production capacity will increase to 80,000 tons. This clearly positions New特 Energy as a leading player in the industry, with its production capacity now measured in the tens of thousands of tons. Thanks to ongoing technological advancements, the quality of its polysilicon has nearly matched electronic-grade standards, and its product costs remain among the lowest in the sector. As a result, New特 Energy’s competitive edge in the polysilicon market—and its status as an industry leader—are beyond doubt.

Liu Mengfei Solar Power Grid

In 2019, as polysilicon prices continued to hit new lows, industry insiders gradually moved beyond the "old dreams" of a decade ago. The days of "sky-high prices" are now firmly in the past, and after weathering the "winter," the "naked swimmers"—those who couldn’t adapt—have already faded away. Meanwhile, the "survivors" are navigating a steadily rationalizing transformation amid the ongoing and increasingly intense Sino-U.S. trade tensions, as well as a more thorough reshuffling of the market landscape.

Industry insiders predict that by 2020, China's polysilicon sector will see a strong emergence of large-scale, competitive players. Amidst the ongoing battles over electricity costs, management strategies, and technological advancements, polysilicon companies in the northwest and southwest regions are expected to maintain their competitive edge, while those in central and eastern areas may face even greater challenges. After all, "survival of the fittest" remains the unshakeable rule for any industry.

Industry insiders have a thought-provoking remark about the currently popular companies—Dongfang Hope, Xinjiang Dahan, Xinte Energy, Tongwei Shares, and Xinjiang Xinxin: "Tongwei Shares and Dongfang Hope are essentially producing polysilicon using methods originally designed for manufacturing animal feed. For companies that can turn a profit even from feeding livestock, the polysilicon industry remains an incredibly lucrative sector."

Domestic heroes clash in battle

On December 12, 2019, the world's largest single-unit polysilicon project—the 120,000-ton-per-year polysilicon project (Phase I: 30,000 tons) of Xinjiang Dongfang Hope New Energy Co., Ltd.—successfully produced qualified trichlorosilane products on December 1, 2019, following comprehensive commissioning and integrated operation of its cold hydrogenation and distillation units. Notably, the cold hydrogenation unit achieved a trichlorosilane conversion rate exceeding 20%, while the distillation unit refined and purified the product to a purity level of 99.9999%. This milestone marks the complete integration of all process steps in Phase I of Xinjiang Dongfang Hope’s 120,000-ton polysilicon project, confirming the project’s successful first-time feed-to-test run and signaling its transition into full-scale production and operational phases.

Currently, Oriental Hope’s business is concentrated in agriculture, aluminum, silicon, chemicals, energy, and real estate. Notably, all of its manufacturing plants are equipped with their own power plants. In Xinjiang, the company has developed an isolated grid system where electricity used for polysilicon production is shared across multiple projects, including electrolytic aluminum, industrial silicon, and carbon products—reportedly at a cost as low as 0.07 yuan per kilowatt-hour. As we know, among the key cost components in polysilicon production, energy costs, depreciation expenses, and raw material costs make up the bulk, with energy costs being the most critical factor. Meanwhile, labor costs actually account for only a relatively small portion. Precisely because of this, Oriental Hope’s competitive edge has become virtually unmatched by any other player in the industry, making its ambitious target of 25 yuan per kilogram entirely within reach.

In 2019, Daqo New Energy Corporation signed polysilicon supply agreements separately with Jinko and Longi, with total order volumes from 2020 to 2022 reaching 140,400 tons. Daqo’s Chief Marketing Officer stated: "With the completion and commissioning of Daqo’s Xinjiang polysilicon production base by the end of this year, the company’s polysilicon capacity will reach 70,000 tons, enabling Daqo to meet the rapidly growing demands of global customers and the booming photovoltaic industry." Currently, the company is actively pursuing the 4A project, which is expected to further boost production capacity to 70,000 tons. Looking ahead, once Daqo New Energy reaches full production capacity, it will likely bring about significant shifts in China’s polysilicon industry landscape. However, according to publicly available company information, this year has seen a substantial increase of 120,000 tons per year in polysilicon production capacity at projects located at the very upstream end of the supply chain. This surge in supply could lead to weaker demand in the downstream market, inevitably putting pressure on the newly released polysilicon capacity and forcing the company to closely manage its response to evolving market dynamics. Meanwhile, according to Daqo’s second-quarter financial report, the company’s polysilicon production cost ranges between $7.42 and $8.12 per kilogram—positioning Daqo with a notable competitive edge compared to other players in the industry.

In 2019, the first phase of Yongxiang New Energy's 50,000-ton-per-year high-purity silicon project in Leshan, Sichuan—part of Tongwei Co., Ltd.—began production. In March 2017, Tongwei announced a partnership with Longi Corporation to jointly invest in and build a 50,000-ton-per-year high-purity polysilicon facility along with complementary new-energy projects. Later that same year, in August 2017, Tongwei planned to invest in an additional 50,000-ton-per-year high-purity silicon plant, complete with supporting new-energy infrastructure, in the Kundulun District of Baotou City, Inner Mongolia. If these projects reach full capacity as planned, Tongwei’s total annual polysilicon production capacity—from Yongxiang alone, its Inner Mongolia facility, and the joint venture with Longi—will surge to 120,000 tons. This would surpass the 115,000-ton capacity of the ongoing projects being implemented by GCL Group once fully operational, propelling Tongwei directly into the position of the world’s largest polysilicon producer.

New特 Energy is a polysilicon subsidiary established by TBEA in Xinjiang. It’s reported that New特 Energy’s new 36,000-ton polysilicon production capacity was commissioned in May 2019. By the third quarter of 2019, the newly operational project had already reached an output of approximately 3,000 tons per month. Once fully ramped up, the company expects its all-in costs to drop below 50,000 yuan per ton, while its total annual production capacity will increase to 80,000 tons. This clearly positions New特 Energy as a leading player in the industry, with its production capacity now measured in the tens of thousands of tons. Thanks to ongoing technological advancements, the quality of its polysilicon has nearly matched electronic-grade standards, and its product costs remain among the lowest in the sector. As a result, New特 Energy’s competitive edge in the polysilicon market—and its status as an industry leader—are beyond doubt.

Poly Xinxin has consistently been the undisputed giant in China's polysilicon and photovoltaic industry. The first phase of its Xinjiang base, with an initial capacity of 50,000 tons, reached full production in the first quarter of 2019, fully meeting the material needs for continuous Czochralski-grown monocrystalline silicon and paving the way for future import substitution. In 2019, Poly Xinxin announced that its shareholders overwhelmingly approved, with a 99.99% approval rate, the transfer of a 31.5% stake in Xinjiang Xinxin New Energy Materials Technology Co., Ltd. from its subsidiary—Jiangsu Zhongneng Silicon Industry Technology Development Co., Ltd.—to the Xuzhou Zhongping Xinxin Industry Upgrade Equity Investment Fund. The transaction was valued at 2.49 billion yuan, with proceeds earmarked to repay company debt and support general operations. Xinjiang Xinxin, a flagship polysilicon project, boasts an initial production capacity of 60,000 tons and a total investment of 5.998 billion yuan. Construction began in 2017, and the first phase achieved commercial production in 2018. Looking ahead, the company plans to further expand production capacity as it moves toward its long-term target.

Wacker Asset Impairment

U.S.-based Hemlock Semiconductor (HSC) is a trusted supplier dedicated to providing high-purity polysilicon for the electronics and solar industries. HSC’s process begins with naturally occurring, ultra-high-purity quartzite, which is refined into the silicon-based chemical trichlorosilane. Using advanced chemical vapor deposition reactor technology, trichlorosilane is transformed into high-purity polysilicon boasting a purity level of up to 99.999999999%. However, amid the U.S.-China trade dispute—and constrained by limited U.S. production capacity—the company has essentially lost its competitive edge and has been forced to progressively shut down its polysilicon production lines.

Known alongside U.S.-based Hemlock Semiconductor (HSC) as the "Silicon Industry's Dual Titans," Germany's Wacker is a globally operating chemical group with approximately 14,500 employees and annual sales reaching around €4.98 billion in 2018. Today, its core business segments include silicones, polymers, polysilicon, and biotechnology—among which it holds a global leadership position in areas such as latex powders and VAE copolymer emulsions, particularly within the silicone, polysilicon, and polymer sectors. In recent years, the polysilicon segment has accounted for roughly 20% of Wacker’s total revenue. Back in 2009, Wacker exited the silicon wafer business to focus exclusively on polysilicon production. At that time, the company operated a single production facility in Burghausen with an initial capacity of 18,000 metric tons. In 2010, Wacker expanded this facility by adding another 12,400 tons, followed by a further expansion of 5,000 tons in 2011. Concurrently, the company inaugurated its new production site in Nünchritz in 2011, boosting capacity there to 15,000 tons. As a result, Wacker’s total polysilicon production capacity rose to 52,000 tons. From 2012 to 2015, however, market conditions kept Wacker’s polysilicon output relatively stable. Then, in 2016, the company completed construction of a 20,000-ton production line in Charleston, USA, complementing its existing facilities in Germany. This expansion brought Wacker’s combined global capacity up to 80,000 tons. Wacker supplies polysilicon to both electronics-grade and solar-grade customers, with electronics-grade clients accounting for about 20% of its overall customer base. Notably, the U.S. plant has occasionally faced operational challenges; for instance, in 2017, a hydrogen gas explosion caused by a technical flaw disrupted production at one of its facilities, impacting approximately 6,000 tons of polysilicon output.

In the era of "silicon supremacy," Wacker once achieved sky-high profits, generating "astronomical" revenues of €500 per kilogram despite a production cost of just €20 per kilogram. However, amid escalating trade tensions between China, the U.S., and Europe in the photovoltaic sector, Wacker’s market share in China has been steadily declining. Recently, the company announced that, "Due to the lack of recovery in the PV project market, coupled with persistently falling polysilicon prices and severe overcapacity in manufacturing, Wacker will be forced to write down the book value of its polysilicon production assets by approximately €750 million this year."

A WACKER spokesperson noted that China’s newly installed photovoltaic capacity has fallen short of initial expectations, leading to an oversupply of polysilicon in the country. "The Chinese government has not only supported the expansion of polysilicon production through loans and incentives but has also been providing polysilicon manufacturers with coal-fired power at exceptionally favorable rates," the spokesperson added. WACKER emphasized that the polysilicon overcapacity is primarily the result of Chinese producers themselves, which has prevented polysilicon prices from rebounding from their record lows. This dramatic reversal has shifted market expectations for WACKER’s polysilicon business—from previously optimistic forecasts to an anticipated EBIT loss of around €750 million. Furthermore, WACKER highlighted that all factors contributing to the asset impairment are directly tied to Chinese government policies, particularly its strategic push toward self-sufficiency in both solar-grade and semiconductor-grade polysilicon production. The government’s projections for new installations have consistently missed targets, exacerbating the industry-wide oversupply situation.

Meanwhile, the industry has conducted an in-depth analysis to determine whether Wacker's argument holds water.

Looking at Wacker's production capacity, sales, and output, its German polysilicon plant has been operating at full capacity since 2019. This was partly due to the fact that its U.S. facility, which recently experienced a major explosion, has yet to fully recover. Meanwhile, Wacker aimed to reduce polysilicon costs by maintaining full production and even stockpiled inventory in anticipation of a price rebound driven by installation surges in the fourth quarter of 2019. However, as China’s photovoltaic installations fell far short of expectations, polysilicon prices remained at historically low levels in Q4 2019. As a result, Wacker’s strategy of leveraging its low production costs to build up polysilicon inventories had virtually no chance of success.

More importantly, the misjudgment of global trade tensions became the root cause of Wacker's polysilicon asset impairment. In the face of this strategic mistake, even the most successful market tactics and financial performance could no longer reverse the situation: At the turn of the century, Wacker established a polysilicon facility in Tennessee, hoping to leverage the region’s low electricity prices to offset the substantial transportation costs—and thereby further capitalize on China’s rapidly expanding renewable energy market. Yet today, as China has emerged as a global leader in photovoltaic module and battery production, as well as a major polysilicon producer, the persistent decline in silicon material prices has forced Wacker to confront, with stark clarity and painful realization, the harsh reality of high long-distance shipping costs.

Experts say that Wacker can only overcome its current predicament by hoping for a resurgence in the European and U.S. markets, as well as by lowering the price of polysilicon produced in the U.S., which would in turn stimulate investment in monocrystalline silicon wafers and solar cells domestically—ultimately driving down U.S. photovoltaic costs.

REC Debt Crisis

Korean OCI was established in 1959, initially focusing on the chemical industry. Today, it has grown into three major business segments: basic chemicals, petrochemical products & carbon materials, and energy solutions. Among these, polysilicon products fall under the basic chemicals division. In 2006, OCI recognized the solar photovoltaic industry as the fastest-growing sector within renewable energy and decided to strategically invest in and nurture polysilicon—the core raw material for solar PV—as its next-generation business initiative. By December 2007, OCI completed construction of its Gunsan plant, which boasts an annual production capacity of 5,000 tons of polysilicon. Subsequently, the company expanded production further by building the second and third plants in 2009 and 2010, respectively. In 2015, through process improvements at its third plant, OCI boosted production capacity by an additional 10,000 tons. Then, in 2017, the company acquired Deosan Malaysia Polysilicon, significantly enhancing its global production capabilities to 72,000 tons annually. As a result, OCI has emerged as a world-leading polysilicon manufacturer.

Norwegian REC was established in Norway in December 1996, focusing on the field of high-purity silicon materials. Its business encompasses solar-grade polysilicon, electronic-grade polysilicon, and silane gas, among other products. REC is a leading pioneer in the silane fluidized-bed production process, with approximately 80% of its annual polysilicon output coming from this advanced technology, while 10% is produced using the Siemens method. The remaining portion consists of specialized electronic-grade polysilicon products. REC operates two major production facilities in the U.S.: the Moses Lake facility primarily manufactures solar-grade polysilicon, while the Butte, Montana site focuses on producing electronic-grade polysilicon and silane gas. Polysilicon remains REC’s core business, accounting for over 80% of total revenue in 2012. However, in recent years, due to the impact of Sino-U.S. trade policies on polysilicon, the Moses Lake plant has seen its capacity utilization drop to around 50%, leading to declining sales and, consequently, a reduction in the revenue share derived from this segment. As a result, REC’s overall financial performance has also been trending downward.

It is understood that REC completely halted production at its Washington polysilicon plant in the summer of 2019, laying off the last 100 employees—leaving behind just one maintenance technician to ensure the equipment could be quickly restored when REC decides to re-enter the Chinese market. In October 2019, REC announced plans to shut down all of its U.S.-based production facilities for its polysilicon business. As of the end of September 2019, REC’s bank balance stood at a mere $46.2 million. According to REC’s third-quarter earnings report, selling off its factory facilities would enable the company to pay off its debts—but doing so would leave REC Silicon’s 15% stake in a polysilicon plant located in Yulin, China, as the company’s sole revenue-generating asset. On October 10, 2019, REC announced that its 600MW heterojunction (HJT) battery production line in Singapore had begun mass production, marking the world’s first HJT project exceeding 0.5GW in commercial-scale manufacturing. REC had initially outlined its 600MW HJT capacity expansion plan back in 2018. In August 2019, REC signed a strategic partnership agreement with Meyer Burger, leveraging the latter’s advanced equipment and collaborating with potential strategic partners to ramp up production capabilities for both its 600MW HJT technology and Smart Wire Connection Technology (SWCT). With the newly operational 600MW HJT line now online, REC is pinning high hopes on this initiative to unlock fresh growth opportunities.

Recently, REC issued a statement announcing that Finland's Nordea Bank has recovered the $17 million compensation loan it had received following the 2012 bankruptcy of one of its subsidiaries. Industry insiders speculate that the subsidiary responsible for the loan was likely REC Wafer, which was involved in silicon wafer manufacturing—and was forced to file for bankruptcy in August 2012 after its parent company, REC Silicon, refused to cover the resulting NOK 1.2 billion asset-liability shortfall.

Source: China Nonferrous Metals News