Geopolitical Maneuvers in the Polysilicon Market:
A precipitous decline has been observed in the influx of polysilicon to China, reaching its lowest point since the year 2011. This phenomenon can be attributed to a strategic shift by non-Chinese polysilicon producers. These entities have demonstrably increased the volume of shipments directed towards Southeast Asian nations. A recent report published by Bernreuter Research sheds light on this development. The aforementioned shift in the destination of these crucial materials is demonstrably a consequence of the solar industry's response to legislative measures enacted by the United States. These measures include the imposition of anti-dumping and countervailing duty (AD/CVD) tariffs, along with the Uyghur Forced Labor Prevention Act (UFLPA). The combined effect of these legislative instruments has exerted significant pressure upon manufacturers seeking to supply the US market with polysilicon.
Johannes Bernreuter, the individual spearheading the polysilicon market analysis firm Bernreuter Research, provided a succinct explanation for the observed trend. He stated that non-Chinese polysilicon producers, specifically Wacker, Hemlock Semiconductor, and OCI Malaysia, are exhibiting a marked inclination to redirect their shipments away from China and towards Vietnam. This strategic shift is demonstrably driven by the fact that three of the four preeminent Chinese solar module suppliers have established wafer fabrication plants within Vietnam. The aforementioned report from Bernreuter Research identifies these three module suppliers as JA Solar, Jinko Solar, and Trina Solar. Notably, Trina Solar commenced production operations at a 210mm monocrystalline wafer facility boasting a capacity of 6.5GW in Thai Nguyen, Vietnam, during August 2023. Furthermore, another prominent Chinese manufacturer, Canadian Solar, is actively engaged in the construction of a 5GW wafer facility situated in Thailand, with an anticipated production commencement date of March 2024.
Navigating the Labyrinthine Tariffs and Legislative Minefield to Cultivate a Bifurcated Supply Chain
The primary impetus compelling these corporations to cultivate production capabilities within Southeast Asia stems from the confluence of the United States' formidable twin legislative instruments: the Anti-Dumping/Countervailing Duty (AD/CVD) enactments and the Uyghur Forced Labor Prevention Act (UFLPA). The former policy stringently enforces import tariffs upon solar products originating from China and destined for the US market. In August 2023, the Department of Commerce (DOC) unequivocally pronounced five solar manufacturers culpable of circumventing these tariffs through the strategic relocation of specific segments of their Chinese supply chains to Southeast Asia for ostensibly "minor processing." It is crucial to note that the aforementioned tariffs are presently suspended by an executive decree issued by the US President's office, with their implementation anticipated for the summer of 2024.Within the intricate web of the AD/CVD policy, wafers occupy a pivotal position as the most upstream component subject to these impositions. A comprehensive exploration of these tariffs can be found within the archives of PV Tech [link omitted].
The UFLPA stands as a more direct and impactful measure. This legislative act explicitly prohibits the entry of any product into the US that has been wholly or partially manufactured within the Xinjiang autonomous province, situated in western China. Bernreuter's report meticulously outlines how leading Chinese solar companies subsequently embarked on the meticulous endeavor of "establishing independent supply chains that rely on polysilicon procured from non-Chinese manufacturers, solely for the purpose of exporting solar modules to the US." This meticulous process, known within the industry as "bifurcation," empowers manufacturers to comply with US import regulations without necessitating an alteration of their practices within markets that do not mandate stringent supply chain transparency. Earlier this month, during a public forum, European solar representatives vehemently criticized this practice of bifurcation. However, Bernreuter's report presents a compelling counterpoint, substantiated by statistics gleaned from Chinese customs authorities. The data reveals a monumental surge in polysilicon exports from China to Vietnam – a staggering increase exceeding 700%. In the year 2022, the volume of these exports amounted to 639 metric tons (MT), whereas in 2023, this figure skyrocketed to a staggering 4,970MT.
Polysilicon Market in Flux: Prices Plummet, Imports Dip
Prices of polysilicon, a key material in solar panels, experienced a dramatic drop of nearly 75% throughout 2023. This decline was reflected in the quarterly results of German producer Wacker Chemie. Despite the price slump, Wacker and OCI Malaysia, another non-Chinese producer, currently dominate China's polysilicon import market, accounting for a staggering 98%.
China's domestic polysilicon production capacity has seen significant growth in recent years. A previous Bernreuter report predicted further market consolidation in 2024 due to even larger capacity expansions planned within China.
The final quarter of 2023 witnessed a significant decline in polysilicon imports to China, almost halving compared to the preceding three quarters. Bernreuter suggests that if this trend continues, polysilicon imports could plummet by an additional 40% in 2024, reaching a maximum of only 38,000 metric tons.
