Crystal silicon photovoltaic hopes processing trade policy continuation

January 28, 2020

Abstract In 2014, the global installed capacity of photovoltaics was over 40GW, of which China achieved 10.6GW installed capacity, accounting for more than a quarter of the global market. In 2014, the photovoltaic industry, especially distributed photovoltaics, was widely disseminated and considered to be distributed photovoltaics. Development yuan...
In 2014, the global installed capacity of photovoltaics was over 40GW, of which China achieved 10.6GW installed capacity, accounting for more than a quarter of the global market. In 2014, the photovoltaic industry, especially distributed photovoltaics, was widely disseminated and considered to be distributed photovoltaics. The first year of development. In addition, China Merchants Bank, Industrial and Commercial Bank and other financial institutions gradually liberalized the credit restrictions of the photovoltaic industry. China Mintan Investment and Evergrande have invested large amounts of money in photovoltaics. Photovoltaic technology has ushered in a new round of outbreaks. The industry is optimistic about the rebirth of the photovoltaic industry. .

Looking forward to 2015, the industry is full of confidence. In March 2015, the “17.8GW new PV installed capacity” plan proposed by the National Energy Administration provided a huge market opportunity for the development of the photovoltaic industry in China and the world. In the first quarter of 2015, China has achieved a photovoltaic installation capacity of 3.3 GW, adding confidence to the 17.8 GW PV installation target. In this regard, the industry has said that the spring of the photovoltaic industry is approaching, they are generally positive and optimistic about the long-term development of the industry. However, at present, some PV midstream and downstream manufacturers have expressed concern about the expiration of the upcoming polysilicon processing trade manual.

I. Development status of China's polysilicon industry

1. The effect of the double-reverse policy is obvious, and the polysilicon enterprise is getting better.

At the beginning of last year, the Ministry of Commerce issued an announcement on the final ruling of anti-dumping and anti-subsidy for imported solar-grade polysilicon originating from the United States, South Korea and the European Union, and adopted trade remedy measures for importing solar-grade polysilicon from the EU. The implementation effect of these policies is very significant. China's processing trade under the category of polysilicon imports surged.

Domestic mainstream polysilicon companies improved their earnings in 2014. Jiangsu Zhongneng, the largest polysilicon company in China, achieved a gross profit margin of 23.4% in 2014; the gross profit margin of Daxin Energy reached 23.7%, and the gross profit margin of TBEA in 2014 also increased to 18.6%.

Domestic first-line polysilicon enterprises have global competitiveness. China's first-line polysilicon companies (Jiangsu Zhongneng, Daquan, TBEA, etc.) already have the world's leading cost competitiveness, and the cost has been reduced from US$25 to US$30/kg before the double-reverse to US$10 to US$15/kg.

2. It is difficult for silicon companies and industries to survive as a link alone.

The silicon wafer industry survives between upstream polysilicon and downstream photovoltaic cell components, and is squeezed by many parties. It is difficult to survive as a single link. Taking upstream polysilicon enterprises as an example, most of them have dual capacity of polysilicon and silicon wafers, and often the silicon wafer production capacity is greater than the polysilicon production capacity, so that the silicon wafer enterprises have no rice. For example, GCL Poly GCL, which ranks first in the world in terms of silicon wafer production, has a polycrystalline silicon output of 67,000 tons, and its silicon wafer output is as high as 13 GW. It also needs to import more than 5,000 tons of polysilicon from the US to fill its insufficient silicon output. . And its wafer capacity is said to be upgraded to 15GW through retrofitting, which will monopolize nearly 40% of the domestic and global silicon and wafer markets. Not only that, but most of the downstream battery pack manufacturers also have their own wafer workshops.

3. Most of the mainstream wafer companies have transformed and exported high-efficiency monocrystalline silicon wafers.

In order to survive, pure silicon wafer companies have transformed and exported high-efficiency monocrystalline silicon wafers. China's five largest monocrystalline silicon wafer companies, such as Longji, Central, Comtec, Jinglong, and Sunshine Energy, earned US$800 million in exports in 2014, accounting for 36% of total wafer exports. The characteristics and competitiveness of these five large-crystal silicon wafer companies lies in the differentiation, value, and high-end line. This is also the reason why these single-crystal enterprises and industries are free from the homogenization price reduction competition of conventional polycrystalline products and can be independent.

4. The processing trade manual is approaching failure, and the mid-stream and downstream manufacturers are trapped in the "four dare not dare" dilemma

In order to protect the normal competition of the domestic polysilicon industry and the steady development of trade, and further block the loopholes in China's trade remedy measures, the Ministry of Commerce suspended the application for import of solar-grade polysilicon processing trade in August 2014, but considering the downstream enterprises. Decided to give the processing trade a one-year delay. At present, the processing trade manual is approaching failure, and the midstream and downstream manufacturers are facing the threat of the blockage of polysilicon processing trade imports, as well as the serious consequences of the sharp decline in the gross profit margin of wafers, batteries and components, and the loss of enterprises. The battery components are subject to multiple attacks on European and American double-reverse and polysilicon double-reverse and processing trade. Most of the battery component companies that survived have export and national competitiveness, and exports account for a large proportion, up to 80%. Therefore, the mid-stream and downstream manufacturers are now caught in the dilemma of "four dare not dare" to "take orders, do not dare to import, dare to produce, and dare not invest."

Second, the adverse effects of the prohibition of processing trade policy

1. Once the trade is banned, the profitability of downstream enterprises will be weakened or even lost.

At present, the gross profit margin of the PV middle and lower reaches is only 10% to 15%. The upstream polysilicon industry's gross profit is slightly better than the middle and lower reaches, and the development is basically balanced. After adopting the general trade method, the profitability of many enterprises will be greatly reduced or even lost.

According to estimates, if the processing trade is switched to general trade, the company will increase tariffs (including 4% tariffs and anti-dumping and countervailing duties), value-added tax and the above-mentioned capital occupation costs, especially for enterprises that cannot afford VAT. The cost will increase the purchase cost of the enterprise by at least 18%, which will increase the cost of silicon wafer by more than 8% and the component cost by at least 4%. These increased costs will cause the company to completely lose its international competitiveness, and the overall profitability of the downstream industry will be greatly reduced. The ban on processing trade will cause these companies to fall into zero profits or even losses.

2. Once the downstream injury, in turn hurt the upstream, and ultimately hurt the overall industry development

At present, the annual export volume of downstream silicon wafers, batteries and modules is much larger than that of raw materials. In 2014, the total export volume of downstream silicon wafers and battery components reached more than 15 billion US dollars, while the import of silicon materials in the same period was about 2 billion US dollars. And the downstream industry has driven domestic employment, the number of employed people is more than ten times that of the upstream, and the investment amount is far greater than the upstream.

If the downstream is reduced by production or transferred capacity, the loss will be greater than that of the upstream industry, which will in turn lead to the profit of the upstream raw material enterprises, ultimately hurting the overall development of the industry.

Tianhe, the world's number one component manufacturer, achieved revenue of US$2.29 billion in 2014, net profit of US$59.11 million, and net profit margin of less than 3%. If general trade is used, the company will reduce profits by nearly $45 million, which is basically unprofitable. If the US double tax rate is increased by about 19%, the company will be struggling.

Yingli, the world's second-largest component manufacturer, has sustained losses since 2011, with a loss of $2.095 in 2014 and a cumulative loss of $1.5 billion in four years. If the processing trade turns into general trade, considering the long-term execution, Yingli will increase the cost by at least 40 million US dollars, which will make it more difficult to turn losses into profit.

Longji, the world's largest single crystal wafer manufacturer, achieved sales of 3.68 billion yuan in 2014, net profit of 293 million yuan, and profit margin of less than 8%. If processing trade turns into general trade, Longji’s profits will be reduced by at least 26%, totaling nearly $15 million.

The world's second-largest single-crystal silicon wafer manufacturer, Central, has a production value of nearly 5 billion yuan in 2014, a net profit of 130 million yuan, and a profit margin of less than 3%. If the polysilicon import processing trade is banned, their profits will be reduced by at least $53 million, directly causing them to fall into losses.

Camdenk, another leading monocrystalline wafer manufacturer, faces the same situation: the company is still in a loss. In 2014, the loss was nearly $15 million. The processing trade suspension order will make the company worse.

3. Prohibition of trade plus trade will weaken the international competitiveness of high-efficiency products

At present, the overseas imported silicon materials generally have stable process performance and high purity, which makes the high-efficiency P-type silicon wafers have room for development, and the performance of high-efficiency N-type silicon wafers is more stable, and the quality of domestic polysilicon cannot meet the requirements. Yingli, Trina, Jingao, Longji, and Central are among the top polysilicon importers, and domestic high-efficiency products are also from these major suppliers. Their polysilicon materials are heavily dependent on overseas imports.

Once the processing trade is closed, these manufacturers will have to adopt high-priced imported silicon materials in the general trade mode, which will lead to an increase in the cost of high-efficiency photovoltaic products, which is not conducive to China's high-efficiency product suppliers to improve their international competitiveness, and will further expand China's efficient products. The gap between the company and overseas manufacturers.

Third, the processing trade should be continued, and the enterprise and industry policies should be reassured.

At present, polysilicon double-reverse, suspended processing trade and a new round of double-reverse in Europe and the United States make domestic PV middle and lower-end enterprises suffer from double-headed attacks, involving more than 300 prefecture-level cities, nearly 30 provinces and cities, trillions of assets, and millions of people nationwide. Employment, thousands of families and communities. There are still hundreds of 100-300MW battery packs in the country that are incapable of surviving.

The Chamber of Commerce and the PV middle and lower reaches enterprises and industries together call on the relevant state departments to observe the people's situation early and take effective measures to properly protect the development of the domestic polysilicon industry while taking care of the survival and development space of the middle and lower reaches, and strive for a win-win situation. Continue processing trade and reassure corporate and industry policies.

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