REC Silicon turned in an encouraging set of figures in its first quarter as a standalone company, and sees positive signs ahead, as it successfully sidestepped China’s polysilicon tariffs via the so-called “Process in Trade” loophole.
2013 was a tough year polysilicon makers, and REC
Silicon was no exception, but the fast-improving fortunes of the global PV industry
meant that demand, prices and revenues rebounded late in the year – and look
set to remain strong through 2014.
REC Silicon's total 2013 revenues
(excluding REC Solar) slid significantly to NKr2.45bn ($400m) – from NKr3.26bn
the year prior, and the company swallowed a full-year operating loss of NKr505m.
However, by the end of 2013 things were looking
substantially brighter, with fourth-quarter revenue up 2% sequentially and polysilicon prices predicted to rise significantly in 2014.
Last October REC Solar – the wafer-to-module maker now based
in Singapore – was spun off from REC Silicon, whose factories are located in
the northwest US.
The spot price of PV-grade polysilicon has risen from about
$16/kg at the beginning of 2013 to nearly $20/kg at present – and REC Silicon
believes it could climb as high as $30/kg by the end of 2014.
Global demand for polysilicon will rise 25% this year, according to NPD Solarbuzz.
REC Silicon is now producing polysilicon via its fluidized
bed reactor technology for $10.50/kg – or $18.40/kg once things like depreciation
and sales costs are accounted for – a drop of 17% since the beginning of 2013.
The company is currently experiencing “stronger than
anticipated” demand, although whether that is due to market pull from
PV manufacturers or customers piling up their polysilicon inventories in
anticipation of higher prices is unclear.
The biggest threat to REC Silicon is the 57%
anti-dumping duty China imposed on its polysilicon last summer and reaffirmed
More than half of REC Silicon’s revenues in 2013 came from
China, where it held an 18% share of the market towards the end of the year
(down from 22% before the duties were put in place).
US-based polysilicon makers have been swept up in the wider
China-US solar dispute, even as Beijing let Europe- and Korea-based producers off
But REC Silicon has thus far largely managed to sidestep
the duties via the Process in Trade loophole embedded in China’s custom laws, which
exempts goods imported only to be processed into products for export -- in this case Chinese PV modules -- from duties.
The proportion of US polysilicon imported into China taking
advantage of this loophole is now above 90%, according to Bernreuter Research.
Still, with the US now contemplating closing a loophole in
its own duties on Chinese PV cells – which allows Chinese module makers to
simply import cells from Taiwan – the future of the Chinese market for US
polysilicon producers like REC Silicon and Hemlock Semiconductor remains highly
REC Silicon's primary markets at present are China and Japan -- which together account for nearly three-quarters of revenues -- but is placing a "new focus" on Taiwan.
REC Silicon expects to sell 19,400 metric tonnes of
polysilicon in 2014. The whole of the global PV-grade polysilicon market last
year amounted to about 200,000MT.