Polysilicon producers suspending production of solar panels

Chinese polysilicon producers are increasingly suspending production of solar panels due to weak exports.

"About 90 percent of the producers have suspended production. Only a few are still working, for example, Jiangsu Zhongneng, Daqo and Asia Silicon, but at about half of their output capacity," Wang Bohua, secretary general of the China Photovoltaic Industry Alliance (CPIA) said.

Lu Jinbiao, deputy general manager of Jiangsu Zhongneng said, "Our company ran at about 60 percent of our total output capacity in November."

Prices have gone down by more than half this year from 230 yuan per kilogram in early January to 110 yuan per kilogram at the beginning of December.

Polysilicon, or polycrystalline silicon, is a key component of solar panel construction. The majority of the world's supply is used for the production of solar power panels.

Wang believed that local solar product plants were importing more polysilicon, adding to the burden on local suppliers.

China imported 70,210 tonnes of polysilicon from January to October, up 26.16 percent year on year and import prices averaged 26.16 U.S. dollars per kilogram, down 61.10 percent year on year, according to customs figures.

Besides increasing imports, overseas markets have turned hostile towards solar energy panels, the main end products of polysilicon.

The U.S. International Trade Commission backed Washington's plan in early November to issue anti-dumping and countervailing duties on imports of crystalline silicon photovoltaic cells and modules from China.

The EU in November announced that it would investigate alleged state subsidies for Chinese solar panel manufacturers. This came amid an existing probe into allegations of "dumping" such products in European markets.

Anticipating shrinking exports, the central government has been considering policies to boost the domestic solar energy market to digest products.

The central government has allocated another 7 billion yuan (1.11 billion U.S. dollars) to subsidize domestic solar photovoltaic demonstration projects, the Ministry of Finance announced on Tuesday.

Together with the 6 billion yuan earmarked in the first half of 2012, China has in total allocated 13 billion yuan to boost its domestic photovoltaic market this year.

Despite such efforts, the polysilicon producers will go through hard times in the coming half year, as the domestic market, even if expanded, will only account for a very small share of the global one, said Wang Haisheng, an analyst on new energies with Minsheng Securities.