Polysilicon 2012-2016: Supply, Demand & Implications for the Global PV Industry

Polysilicon 2012-2016:
Supply, Demand & Implications for the Global PV Industry

Webinar on February 9, 2012

Moderator: Speaker:
Carolyn Campbell Brett Prior
Research Associate Senior Analyst
campbell@gtmresearch.com prior@gtmresearch.com

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http://www.greentechmedia.com/research/report/polysilicon-2012-2016

200+ Pages
120+ Company profiles
90+ Charts, Tables, and Illustrations
Historical and forecast capacity, cost, and price from 2008-2016

2. Comparison of Polysilicon Production
1. Polysilicon Overview 3. Polysilicon Supply and Demand 4. Polysilicon Economics
Technologies

Why should you care about the cost of polysilicon?
Because lower poly prices and higher module efficiency will shave ~$0.20/W off the cost of a c-Si module in 2012 alone

Numbers look too low?
Here are the 3Q11 results:
Forecasts included in the full report
• Trina
• $0.65/W non-silicon cost
• $0.37/W silicon cost
• $1.02/W total cost

• Best-in-class conversion
costs by step
• Wafer $0.17/W (GCL)
• Cell $0.17/W (LDK)
Forecasts included • Module $0.28/W (CSI)
in the full report • Non-Si $0.62/W

Technologies

Solar PV manufacturing 101

Technologies

Polysilicon manufacturing 101

Technologies

Polysilicon industry is concentrated, could be considered a
“balanced oligopoly”

• HHI is measure of
industry
concentration on a
scale of 0 to 10,000
(10,000 is a
monopoly)

• A market with an HHI
less than 1,000 is
regarded as
competitive

• Poly industry is ~640

Technologies

Even with 22 GW of c-Si PV installed in 2011, there still remains significant
oversupply at all stages of the value chain

Technologies

China, the US, and Korea are the 3 largest producers of polysilicon

Technologies

Costs that vary by technology include energy (~13%), and depreciation &
interest (~48%)

Technologies

Energy use matters, and in this category FBR and UMG win

Technologies

But Capex (which determines Depreciation & Interest) is much more important
than energy use, and on this metric Siemens HC and UMG “take the cake”

Technologies

Lower purity poly sells at a 10-30% discount to higher purity poly

Technologies

Excluding Depreciation & Interest, FBR is the cost leader

Technologies

But, when depreciation & interest are included, Siemens HC is the lowest
cost option

Technologies

And on the most important metric, profit, Siemens HC again takes the gold

Technologies

Historically, capacity has remained close to total demand

Technologies

But in the last 4 years, capacity growth has outstripped demand growth, and
this imbalance may get worse before it gets better

Technologies

Profit margins are key to understanding where pricing is headed

Technologies

Spot prices are driven by cash costs, whereas contract prices have a
floor set by total costs

Technologies

Since 2009, cash costs for poly have been reduced from ~$40/kg to <$20/kg
Poly Cash Costs (excl depreciation, SG&A), 2009-present
$80

$70
Poly Cash Cost, excl depreciation ($/kg)

$60

$50

$40
ReneSola, $36
$30

$20 GCL, $18 LDK, $20
OCI, $18 Daqo, $18
$10 REC FBR, $13

$0
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 2012

Technologies

Depreciation adds another $3-8/kg to manufacturing costs

Poly Manufacturing Costs (incl depreciation, excl SG&A), 2009-present
$120

$100
Poly Manufacturing Cost, incl
depreciation ($/kg)

$80

$60

$40
LDK, $27
$20 Daqo, $22
GCL, $21 REC FBR, $20

$0
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 2012

Technologies

Poly ASPs collapsed in 4Q 2011, falling over 40% at REC

Poly ASP by Manufacturer, 2010-present
$80

$70

$60 REC, $57

Daqo, $52 42%
$50
Poly ASP ($/kg)

drop
GCL, $44 from 3Q
$40 to 4Q
REC, $35
$30

$20

$10

$0
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

Technologies

EBITDA Margins have fallen from very attractive (50-70%) to toxic in just 4 quarters

EBITDA Margin by Poly Manufacturer, 2008-present
80%
OCI, 70%
70%
EBITDA Margin, % of revenue

60%

50% REC, 51%

40% Wacker, 39%
OCI, 34%
30% REC, 28%
20%

10%

0%
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11

Technologies

Including the impact of depreciation, EBIT margins are now approaching 0%

EBIT Margin by Poly Manufacturer, 2008-present
60% OCI, 57%

50%
EBIT Margin, % of revenue

40%
REC, 34%
30% Daqo, 29%

20%

10%
OCI, 6%
REC, 4%
0%
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11

Technologies

What is next for the polysilicon industry?

• Where is pricing headed?

• When will the plant closures allow the supply/demand gap to
close?

• The feast is over - which companies are best positioned to survive
this period of famine?

Technologies

Supply stack analysis can help to reveal the likely winners and losers, as well
as future pricing trends

Cost estimates for every operational poly
plant included in the full report

Q&A

Moderator: Speaker:
Carolyn Campbell Brett Prior
Research Associate Senior Analyst
campbell@gtmresearch.com prior@gtmresearch.com

Polysilicon 2012-2016: Supply, Demand & Implications for the Global PV Industry

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