Polysilicon prices have fallen below US$8 per kilogram for the first time, putting many Korean solar companies in danger of going bankrupt.
Global polysilicon prices fell to US$7.92 per kilogram as of Aug. 7, market researcher PV Insight said on Aug. 15. The figure represented a drop of US$0.11 from the previous week. Compared with the beginning of this year, it fell by over US$1 per kg. The prices stood at US$11.28 a year ago US$15.55 two years ago.
The polysilicon break-even point (BEP) is US$13 to US$14 per kg, so companies continue to produce polysilicon only to cover fixed costs. The biggest cause of such a steep price drop is oversupply from China. Demand for photovoltaic devices is beginning to recover due to China's resumption of subsidies but not significantly.
China is reportedly supplying electricity at half the prices of its competitors including Korea based on solar and wind power generation in its desert areas. Polysilicon manufacturers can significantly increase price competitiveness by lowering electricity bills as electricity accounts for 35 percent of the polysilicon production costs, Credit Suisse said. The cost for polysilicon production in Northwest China is reported to be 17.5 percent lower than that in Korea.
As a result, OCI, a leading polysilicon manufacturer in Korea, has been suffering continued operating losses. OCI lost 40.1 billion won in the first quarter of this year and 19.8 billion won in the second quarter. OCI is seeking an earnings rebound through capacity expansion in Malaysia which can reduce costs and production of single crystal polysilicon with high power generation efficiency, but is expected to go through hard days for the time being.
Hanwha Chemical, which produces 15,000 tons of polysilicon annually, is seeking to boost profitability by merging with Hanwha Q CELLS & Advanced Materials, a solar cell and module maker.
Korean companies are going under one after another. SMP, which was co-founded by Lotte Fine Chemical and U.S. solar company Sun Edison in 2011, went bankrupt at the end of 2017, while Hankook Silicon, Korea's second-largest polysilicon manufacturer, applied for court receivership in May last year.