China's polysilicon import depth analysis in 2011 [chart]

For the domestic photovoltaic industry, which started late, it is not surprising that polysilicon has long relied on imports. With the growth of the domestic polysilicon industry, its dependence on imports has gradually declined, but since 2011, the deteriorating market trend has made the already somewhat eased import dependence rise quietly. Different from the loss of the market because of the limitation of output, the effect of “inflow of foreign polysilicon and production of domestic polysilicon” caused by the shrinking of terminal demand is creating a new supply and demand cycle of domestic photovoltaic “two ends out”.

According to customs data, in the first half of 2011, the import volume of polysilicon increased at first and then decreased. Among them, affected by the start of domestic polysilicon companies in January, the import volume was once as high as 5,512 tons. In February, it gradually fell to 3,316 tons under the gradual recovery of the domestic market. However, as the downstream demand cooled in March, the volume of imports rose again. To 5921 tons, the ring increased by 78.56%. In the following three months, import volume began to decline slightly. In April, May and June, it was 5,664 tons, 5,273 tons and 4,692 tons, respectively.

July entering the third quarter is undoubtedly the month of import turnover this year. Polysilicon imports rose to 5,191 tons this month, an increase of 41% year-on-year, an increase of 10.62%. In the following August, imports increased steeply to 6,473 tons, an increase of 71.6% year-on-year, and an increase of 24.7% from the previous quarter. In September, another record high was that while imports of polysilicon reached an annual peak of 6,489 tons, its cumulative total import volume also exceeded 48,500 tons, which already exceeded the full-year forecast.

The European and American markets are still the main markets for domestic polysilicon imports. The total import volume of the United States and Germany has accounted for about 40% of the total imports for a long time. According to customs data, in the third quarter, imports of polysilicon from the United States and Germany reached 4,139 tons and 3,408 tons, respectively, which accounted for 22.8% and 18.77% of total imports in the current quarter.

At the same time, it is worth noting that since June, domestic imports from South Korea have also suddenly increased, and they quickly surpassed Europe and the United States. Import data in July showed that South Korea's imports of polysilicon reached 2,054 tons, which was far higher than that of the United States and Germany, which were the last two countries, and the latter were only 1,320 tons and 720 tons respectively. In August, the German market rebounded, but in absolute terms, South Korea has already replaced the United States in ranking first. In the month, China imported 2,521 tons of polysilicon from South Korea, 1,401 tons from the United States, and 1,249 tons from Germany, which were 22.7%, 4.6%, and 73.4% higher than the previous month.

It is understood that in August, domestic polysilicon imports reached a record high. However, this data was refreshed again after one month. On the one hand, the price of polysilicon has continued to fall, and domestic manufacturers have reported that actual transactions have become increasingly difficult; on the other hand, domestic polysilicon imports have reached record highs. There are two main reasons for this: First, a large number of solar energy companies in Europe and the United States have shut down or relatively reduced production, which has led to more foreign polysilicon products entering the Chinese market. Second, a large number of domestic polysilicon plant production cuts have caused domestic supplies to gradually decline.

In the fourth quarter, the import volume of polysilicon remained at a high level, but foreign polysilicon plants also reduced some of their output in the fourth quarter. Therefore, the total import volume of polysilicon fell slightly in the fourth quarter. In the fourth quarter, China’s total imports were 16069.92 tons, a decrease of 11.48% compared with the previous period.

Although polysilicon projects have been continuously launched in the past few years and production capacity has continued to expand, China’s polysilicon supply has so far been dependent on imports. According to the latest customs data, from January to December 2011, China imported a total of 64613.86 tons of polysilicon, an increase of 36.00% year-on-year; the import amount was 380049.80 million US dollars, an increase of 42.22% year-on-year. The expansion of downstream manufacturers is the key to stimulate the increase in imports of polysilicon. Specifically, from January to December of 2011, China imported 21,361.10 tons of polysilicon, 17,476.32 tons of polysilicon from the United States, and 12,207.11 tons of polysilicon from Germany. The first three major countries increased by 89.47% year-on-year, -4.23% and 17.88% respectively.

The “Polysilicon Industry Access Requirements” issued by China in 2011 made strict access regulations for new-build and expansion polysilicon projects. For some industry insiders, this will lead to the growth of polysilicon production capacity is likely to lag behind the market demand in a period of time. With 80% of companies in the industry being squeezed out of the market due to non-compliance, polysilicon capacity gaps exist for a long time.

According to the annual solar report released by PHOTON, an international photovoltaic consulting company, it can be seen that with the rapid growth of global demand for photovoltaic solar cells, the polysilicon market will rapidly expand. In the current policy and economic environment, the global polysilicon market demand is expected to grow at an average annual rate of 16% from 2010 to 2014, and it is expected that the demand will reach 290,000 tons by 2014. The report also predicts that if the photovoltaic industry is encouraged in more countries, the supply of polysilicon will increase at an average annual growth rate of 43%, and the demand may reach 500,000 tons by 2014.