LDK set to treble polysilicon capacity as price plunges

Chinese solar company LDK Solar aims to treble its polysilicon production capacity by 2014 – even as the sector faces plunging prices amid global oversupply.

The company has unveiled plans to build a new 30,000 tonne plant in Hohhot, Inner Mongolia, meaning LDK's total production capacity is set to reach 55,000 tonnes by the end of 2013.

The announcement came as prices for polysilicon – the key raw material in most PV modules – hit an eight-year low, as European demand remained weaker than expected for an industry already facing oversupply.

Polysilicon sold on the spot market fell to $34.51/kg in the week to 31 October, according to figures from Bloomberg New Energy Finance.

Recharge understands that spot prices of $25/kg are being quoted this week.

LDK already has 17,000 tonnes of capacity, making it one of China’s largest producers behind Asian leader GCL-Poly.

After finishing ‘debottlenecking and hydrochlorination projects’ at its Chinese factories it plans to reach capacity of 25,000 tonnes by mid-2012.

LDK will add a further 30,000 tonnes at the new plant in Hohhot, it said while staging a ground-breaking ceremony there.

But thousands of tonnes of new capacity are set to come online globally before then. Wacker Chemie, one of the sector’s biggest players, will double capacity to 33,000 tonnes by spring 2012. GCL-Poly plans to more than double capacity to 46,000 tonnes this year.

Charles Yonts, analyst at CLSA, says there is already around 35GW of supply locked in for next year, with demand for about 24GW.

LDK's new expansion plans are astounding both because of the oversupply and because their balance sheet is already extremely stretched,” Yonts says.

Expansion across the global industry comes as demand from panel makers failed to reach expectations this year, driving down prices. Wacker recently warned that it will not reach its sales guidance this year.

Norway’s REC announced in September that it would shut three of its oldest wafer and cell plants and cut 700 jobs. Its polysilicon prices dipped 8% during the third quarter while wafer prices fell by 17%.

Min Li, analyst at Yuanta Securities in Hong Kong, says the company is being impacted by the aggressive growth of GCL-Poly. The company is set to increase its market share of wafers to 29% this year from just 8% last year and up to 40% in 2012, thanks to cost advantages that make it the lowest-price producer in the industry, says Li.

LDK says it is also focusing on lower costs, and points to the “vastly available and competitively priced energy and other resources in Inner Mongolia”, which will benefit its new manufacturing facility there.