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Polysilicon (a derivative of sand) is used as an essential raw material in solar panels. The dearth of Polysilicon had put tremendous pressure on it's price. Starting at around $35 per kg in 2004, the price doubled to $70/kg by 2007. Spot prices in 2008 were expected to be to be $200 or more/kg. But spurred by incredible demand by earlier 2008 the spot price for Polysilicon was $450 to $500. This price hike resulting from dearth of Polysilicon introduced new players into the Solar Polysilicon Supply market. This has also prompted some exotic financial dealing where some solar panel manufacturers are using pre-IPO funds to secure future availability of Polysilicon. Polysilicon crunch
A number of solar panel makers have gone public the past 18 months. Many earmarked IPO proceeds for polysilicon in deals called “pre-payments.” |
| Company | Ticker | IPO proceeds | Polysilicon pre-pays | | JA Solar | JASO | $259 mln | $120 mln | | SunTech Power | STP | $455 mln | $100 mln | | Canadian Solar | CSIQ | $ 115 mln | $30 mln | | SolarFun Power | SOLF | $150 mln | $50 mln | | Trina Solar | TSL | $107 mln | $30 mln |
| | | Data: Thomson Financial / company reports | |
. Before the solar companies came onto the scene in a big way, chip firms usually inked three- to six-month supply contracts with polysilicon producers. Now "you've started to see that elongate towards one- or multi-year contracts," said CIBC's Osborne. The solar market's big polysilicon push came in 2006. For the first time ever, solar-panel makers consumed as much polysilicon as did the chip Travis Bradford, president of the Prometheus Institute for Sustainable Development in Cambridge, Mass. says that the global demand for solar panels is growing at about 50 percent per annum, but the polysilicon supply for solar will grow by 80 percent for each of the next couple of years. The growing demand and the lack of supply has also put-pressure on the chip industry, which uses Polysilicon as a base material. For the first time in 2007 solar panel makers consumed 50 percent of the Polysilicon available. In 2000 solar panels had used only 10 percent of Polysilicon available globally.Polysilicon is the major cost in the manufacturing of solar panels. It has been as high as 40 to 50 percent-of total cost of Solar panel. Isupply Corp predicts that Polysilicon supply will outstrip demand by 2010. Although earlier in 2008 the spot price for Polysilicon was at $450 to $500, in October the prices drastically dropped to $ 200 per kg. New suppliers in the market had tremendous impact in this price reduction. By 2010 when the supply is expected to outstrip demand, Polysilicon price is expected to drop to $50 to $80 range. Major Polysilicon Suppliers:
(1) MEMC Electronic Materials (St. Reties, mo) (2) Wacker Chemie Ag. (3) Renewable Energy Corp.
4. Dow Corning 5.Dow coming 5. Hemlock Semi conductor Corp Total Polysilicon suppliers globally 70. In the past, 7 suppliers made is 90 percent-of the supply. By 2012 it is expected that 40% of all Polysilicon will be supplier by the new entrants. There are major Chinese new companies entering the market. Despite the credit crunch which has definitely impacted the solar installation business, the improved supply of solar wafers is great long term news for the industry
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