L R AS Published on Monday 20 September 2021 - n° 374 - Categories:trade war, silicon mono/multi
The situation of silicon in the PV industry and the Sino-US conflict
Silicon production capacity is unable to keep up with the rapid expansion of PV capacity. It takes more than two years to complete the construction of a silicon production unit and then reach full operation.
The imbalance between supply and demand
increased silicon prices by 250% (more than tripling) between the 2nd half of 2020 and June 2021.
Since 2020, wafer, cell and panel production capacities have expanded rapidly, reaching 264 GW, 322 GW and 365 GW, respectively, by the end of the first half of 2021. They are expected to reach 365 GW, 439 GW and 463 GW by the end of this year. Global silicon production is expected to reach 550,000 metric tons this year, which will allow for the production of about 190 GW of modules.
While the worst of the shortage has passed, trade disputes between the US and China are causing uncertainty. The Hoshine silicon metal import ban restricts imports of silica products. The US Senate also passed the Uyghur Forced Labour Prevention Act. It prohibits the import of goods produced in Xinjiang. It still needs to be passed by the House of Representatives. This would broaden the range of companies affected by the restriction
Various panel manufacturers risk having their shipments seized because they use Hoshin silicon metal. Since August, some manufacturers' panels have reportedly been seized by import officials. Some were reportedly released shortly afterwards.
In addition to the US, Canada and Mexico may introduce similar measures. In the European Union, several member states have recently passed or drafted laws to combat forced labour in supply chains.
Xinjiang accounts for 35-40% of global silicon production. Hoshine, the world's largest silicon metal manufacturer, absorbs 20%. 20-40% of polysilicon could be restricted by the US or Europe. Only 20% of the silicon will be banned from entering Europe or the US if the measure only applies to Hoshine.
Silicon production outside Xinjiang can supply 82 GW in the second half of the year and 196 GW in 2022 and 218 GW in 2023, which is sufficient to meet demand from the US and countries that may impose import restrictions. However, the US market could be slightly affected.
If Xinjiang-made products are banned from import, Daqo, Xinjiang GCL, TBEA, East Hope will be affected. This will then affect 40% of silicon. There will be about 33 GW, 84 GW and 100 GW of silicon available in the second half of 2021, and for 2022 and 2023, respectively - enough to serve the US market.
If Europe joins the US, silicon shortages will occur immediately in regions other than Xinjiang. If this happens in 2022, polysilicon supply outside Xinjiang will be in tight balance and slightly in deficit during the peak season. In the 2023 scenario, overall silicon supply will be in surplus again after large volumes of new capacity are commissioned.
PV Infolink's Lin concludes that import restrictions and the Uyghur Forced Labour Prevention Act will not significantly affect US demand. It all depends on the European attitude.
Silicon impacts after 2023 will be limited as abundance will drive prices down. Various companies are evaluating the possibility of resuming production. Others are announcing their next production. If these productions are effective, prices will fall due to surpluses
PV Magazine of 14 September 2021
Editor's note: This message seems far too optimistic: on the one hand, the author does not consider the political aspect enough. On the one hand, the author does not consider the political aspect sufficiently. China is very concerned about its independence. The United States is insulting it by refusing silicon-based products from Xinjiang. China has already reacted (see elsewhere and this week's PV Watch).
The economic aspect is not sufficiently taken into account. By claiming a shortage of silicon in 2020-early 2021, by causing a considerable increase in its price, and by noting a still strong global demand for panel exports, China has understood that it only needs to increase, with various arguments (regulatory these days), the prices of silicon and panels. In this way, it shows its political power, enriches its companies and weakens its competitors. What more could one ask for?
The rest of the world's willingness to buy panels is going to come up against high prices, and organised scarcity of panels
The political dimension of the issue is more important than the economic aspect. We must not make a mistake and not remain on a Western economic logic.