Matt Margolis – 2/27/14
Courtesy of greentechmedia it appears as though polysilicon shortage may arrive before the end of 2014. The magic number mentioned by various sources is that a polysilicon spot price of $25 per kilogram will trigger expansions. One other interesting point is greentech is coming up with a base forecast of 42 GW for demand versus Solarbuzz at 49GW. Greentech, however does have a high supply estimate of 50GW, which will lead to a “market would be grossly undersupplied, and significantly more manufacturing capacity than we currently forecast would have to be added to meet demand”. If you believe Solarbuzz current forecast of 49GW and greentech’s high demand case of 50GW. It does sound like polysilicon orders will be flying in before the end of 2014
Some key excerpts are below from greentechmedia.
2014 Supply-Demand: The Base Case
After having accounted for likely expansions in 2014, a clearer picture of supply-demand for 2014 emerges, as shown in the chart below, where additional supply comes on-line to meet expectations of strong demand growth. Under this scenario, available supply for wafers, cells and module exceeds demand by 30 percent to 45 percent, implying a stable and balanced market. It is only in the case of polysilicon, where excess supply is just 13 percent, that we appear to be headed for a real supply shortage: this is the driving factor behind GTM’s previously expressed view that polysilicon pricing will climb back to levels of $25 per kilogram by the end of the year.
2014 Supply-Demand: The High Case
Before rushing to conclusions, it is worth remembering a final point. Much of the analysis above ultimately comes down to our 2014 end-demand estimate of 42 gigawatts. But time and time again, early-year PV market sizing forecasts have proven to be conservative in the final analysis.
As with previous years, the forecast risk for 2014 seems to lie very much on the upside, with GTM’s high-case installation estimate for 2014 in the neighborhood of 50 gigawatts. In this case, the market would be grossly undersupplied, and significantly more manufacturing capacity than we currently forecast would have to be added to meet demand. Given China’s new PV regulations, still-prevailing constraints on capital spending and equipment lead times, it is unclear if suppliers would be able to react in time to meet such an upswing in demand, especially in the case of polysilicon.
Source: GTM Research Global PV Competitive Intelligence Tracker
In conclusion, there are definite signs that at long last, balance between supply and demand in the PV market has not just been restored, but is beginning to trend in the opposite direction from the past few years — with the very real possibility of a supply shortage in the offing. Once again, it is a reminder that when it comes to the PV market, the winds of change can blow very quickly.