Is the era of "silicon king" coming?

On October 20, Tongwei Co.
, Ltd.
, a leading domestic polysilicon enterprise, handed over an excellent report card
.
In the first three quarters, the company achieved a net profit of 21.
73 billion yuan, a year-on-year increase of 265.
54%; Non-net profit was 21.
981 billion yuan, a year-on-year increase of 270.
62%.

It is worth noting that among the many polysilicon manufacturers that disclosed performance, Tongwei shares, which doubled profits
, were not alone.
In the case of high profits of polysilicon companies, the polysilicon market has frequently reported the news of signing long sales orders, is the era of "silicon king" coming?

Since the beginning of this year, polysilicon manufacturers have signed at least 12 long sales orders
.

On March 22, Tongwei announced that it signed a sales contract of 203,600 tons of polysilicon with LONGi Green Energy until December 2023; on June 18, June 23, July 2 and September 10, it announced the signing of five long sales orders, except for the agreement with Baotou Meike Silicon Energy Co.
, Ltd
.
until 2027, the rest of the agreement period until 2026.
So far, Tongwei has signed a total of 6 polysilicon sales orders, with a sales volume of 1.
4422 million tons
.

Daqo Energy announced on February 28 that it signed a 30,000-ton polysilicon sales contract with a customer for a period of 2026; On October 14, it announced that it had signed a sales contract of 155,300 tons with Shuangliang Silicon Materials (Baotou) Co.
, Ltd.
for the period until 2027, and on October 17, it announced that it had signed a sales contract of 46,200 tons of polysilicon with a customer until 2027
.
The cumulative sales volume of these three contracts is 231,500 tons
.

Xinte Energy announced on July 12 and September 30 that it had signed polysilicon sales contracts of 201,900 tons and 150,000 tons of polysilicon with Shuangliang Silicon Materials (Baotou) Co.
, Ltd.
, both with a period of 2030, and on August 27, it announced that it had signed a sales contract of 336,000 tons of polysilicon with JinkoSolar and its subsidiaries until 2030
.
The cumulative sales volume of the three contracts was 687,900 tons
.

According to statistics, according to the current price of polysilicon of about 300,000 yuan / ton, the cumulative sales of long-term orders disclosed by the above-mentioned polysilicon companies have exceeded 700 billion yuan
.

As for the phenomenon of frequent long orders in the polysilicon market, industry analysts believe that signing long orders is a common way to
maintain a stable supply of polysilicon.
For polysilicon manufacturers, if they do not sign a long order, once the supply of polysilicon increases in the future, downstream purchases can be made at will, and the sales price of polysilicon will be affected.
For polysilicon purchasers, polysilicon prices may rise if there is no large-scale mass production of polysilicon in the future, and signing long orders can better ensure orderly production
.

"Why polysilicon prices have risen so much boils down to an imbalance between
supply and demand.
" An expert from a silicon industry association pointed out
.

According to the China Photovoltaic Industry Association, the main problems in the polysilicon supply chain and industrial chain are: the mismatch between the
expansion cycle and capacity scale of each link.
In the second half of 2018, polysilicon prices were low and manufacturers were not willing
to expand production.
In 2019, only Dongfang hoped to build new production capacity, coupled with factors such as high production costs, polysilicon production capacity did not rise but decreased
in the first half of 2020.
Since the second half of 2020, with the easing of the new crown pneumonia epidemic, market demand has begun to recover, and the downstream polysilicon industry has expanded significantly
.
Tongwei, Xinte Energy, Daqo Energy and other enterprises have successively expanded production, but because the expansion period is significantly longer than that of downstream industries such as silicon wafers, cells, and modules, there is a gap of more than one year for new production capacity, resulting in a sharp increase
in polysilicon prices.

"At the end of 2021, the domestic polysilicon production capacity was about 510,000 tons/year, and the overall supply was tight, and polysilicon prices continued to rise, reaching about 1.
18 million tons/year by the end of 2022, and polysilicon prices are expected to decline
from the fourth quarter of this year.
By the end of 2023, polysilicon production capacity will reach 2.
27 million mt/year
.
By then, polysilicon prices will fall
further.
The aforementioned expert analyzed
.

It is worth mentioning that the pricing rules for long sales orders disclosed this year are: the actual purchase price adopts the monthly negotiation method, and the purchase amount may fluctuate with the market price, and the actual monthly purchase order shall prevail
.

In this regard, some industry experts said that this means that the actual turnover of the above long orders will not be as high as expected, and the model of "silicon is king" will not last
forever.
At the same time, the discourse power of polysilicon pricing will also change
with supply and demand.

Domestic polysilicon production capacity continues to expand, and international support for the development of new energy and polysilicon industry expansion has also followed
.
So will the "comeback" of the international polysilicon industry and photovoltaic manufacturing change China's leading edge in related fields?

"New polysilicon capacity projects have the characteristics of long cycle and large investment, and according to the investment amount disclosed by many countries, the scale is not large
.
Under the influence of multiple factors such as the epidemic and the Russia-Ukraine conflict, the landing of these polysilicon production capacity may not be smooth
sailing.
An expert in the field of polysilicon said that in the future, China will continue to maintain its advantages
in photovoltaic products such as polysilicon and new energy.