The polysilicon sector experienced upheaval in 2021. Discordant production capacity and demand of the PV supply chain kept polysilicon prices elevated throughout the year. Accordingly, the rather stable overseas markets saw prices fluctuate more evidently and stayed on a year-long upward trend. InfoLink compiles China’s custom data of polysilicon imports, reasoning causes behind these changes and their impacts for the future.
Import volume dropped from levels in 2020
China imported 106,000 MT of polysilicon in 2021, a 23.1% YoY decrease from the 138,000 MT in 2020. This can be attributed to the following causes:
Firstly, production capacity of overseas manufacturers decreased. In 2019, the low-price environment in the polysilicon sector took toll on polysilicon manufacturers, especially those outside of China with higher electricity costs. During 2019 and 2020, REC Silicon in the U.S., OCI’s South Korea-based plant, Hanwha Chemical, and Elkem in Norway all withdrew from the polysilicon industry. As a result, polysilicon production output overseas dropped 47% YoY in 2020. Manufacturers shipped stocks after the halt of production. But as inventories depleted, polysilicon supply overseas plummeted. South Korea, with the close of OCI’s manufacturing plant, has no polysilicon production capacity. By selling inventories, the country remained to be the biggest polysilicon exporter for China in 2020, securing 36% of share. The figure plunged to merely 3% in 2021, dragging down polysilicon import volume of the year markedly.
The graph indicates a fast upward trip of polysilicon import prices in the second half of 2021. Compared with the steady price trend in 2020, monthly average prices in 2021 rose markedly. The swift hike could have stifled purchases, leading China’s import volume to decline gradually in the second half of the year.
Import volume shares and prices
Home to Wacker and OCI, the two none-Chinese manufacturers that have steadier production, Germany and Malaysia exported the most polysilicon to China in 2021, together accounting for 75% of import volume. Compared with 2020, fewer countries exported polysilicon to China in 2021. South Korea, which used to be China’s biggest polysilicon exporter, saw its share of import volume rapidly shrink. With no intention to re-initiate production facilities, the country is expected to see its share close to nil. Japan and Taiwan do not have polysilicon production facilities, but still exported small amounts of polysilicon to China, probably reselling left-over long-term polysilicon orders.
Prices at which China imported polysilicon from different regions gradually increased on a monthly basis in 2021, in accordance with average market prices. Germany and Malaysia, with stabler production capacity and quality, exported polysilicon at higher prices, whereas countries with smaller export volume and entrepot trade markets sold polysilicon to China at lower prices.
In the future, with OCI and Wacker that have robust production capacity, Germany and Malaysia are expected to account for most of China’s polysilicon imports. Exports from South Korea will continue decreasing, even completely diminish, as inventories run out. Other countries and the U.S. will remain the smaller polysilicon exporters for China.
Subject to the Withhold Release Order (WRO) and the Uyghur Human Rights Policy Act of 2020, it is believed that the safest way to export PV products to the U.S. is to set up a supply chain that is completely independent of Xinjiang and to employ polysilicon from outside of China, which has become an indispensable resource for business in the U.S., the world’s second-largest PV market. Presently, polysilicon from China and abroad saw small price difference. Meanwhile, downstream sectors sealed long-term orders to secure polysilicon supply for the future. Price differences will enlarge, as demand from the downstream increases.