On July 20 China’s Ministry of Commerce officially announced on its Chinese language website that it accepted an anti-dumping petition from domestic polysilicon makers against imports from Korean and American polysilicon producers. The MoC will now start the formal process to decide if it will start an official investigation or not.
If anti-dumping or countervailing duties are eventually imposed on foreign polysilicon makers, domestic merchant polysilicon producers will obviously benefit. The losers will not only be the foreign companies who have to pay the duties, but also the large number of Chinese wafer makers that rely on foreign produced polysilicon and their Chinese cell-maker customers.
As analysed in the Solarbuzz Polysilicon and Wafer Supply Chain Quarterly, under a moderate end-market PV demand scenario, China would not be expected to produce enough cost-competitive polysilicon to meet its own domestic demand.
Figure 1: Chinese Domestic Polysilicon Supply/Demand Forecast
Source: Solarbuzz Q2 2012 Polysilicon and Wafer Supply Chain Quarterly
If end-market demand is on the high side, the shortfall would become far more severe. China’s large wafer and cell industries rely extensively on low cost polysilicon imports.
Polysilicon costs are determined mainly by production know-how and process, electricity consumption and prices, as well as scale of operation. So the largest, most experienced polysilicon makers tend to have the lowest cost structure, and thus the ability to lower prices the most, regardless of where they are located.
Although there are many Chinese-based polysilicon makers, few of them (with the exception of GCL) have either the scale or know-how to compete on costs with top-tier foreign makers. Ramping up polysilicon production is a multi-year process, so even heavy duties applied to foreign imports would not resolve this in the short-term.
It is unclear how this latest round of PV dumping allegations and investigations will eventually play out, and the timescales that would be involved. But if duties are to be imposed, it could potentially lead to higher costs and prices throughout the supply chain.