Concerns remain amid reviving silicon industry

BY CHINA ECONOMIC NET  Ji Leilei

Data released by the 2014 China International Conference on Silicon Industry indicates that China produced 700,000 tons of industrial silicon in the first half of the year, an increase of 16.7 percent on a year-on-year basis; average domestic price of polycrystalline silicon was 161,000 yuan per ton, a year-on-year growth of 23 percent; the polycrystalline silicon industry saw 600 million yuan profits, an increase of 208 percent on a year-on-year basis. Ma Tianhai, deputy secretary general of Silicon Industry Branch of China Nonferrous Metals Industry Association, said that China's silicon industry market is ushering in a full recovery.

When it comes to the reasons, industrial policies support and increased market demands contribute to the full recovery; in addition, the full recovery of the silicon industry highlights the achievements of further optimization and adjustment and enterprise technological transformation of China's industrial silicon industry.

In recent years, accelerated upgrading of equipment by China' industrial silicon production enterprises and obvious improvement of industrial concentration have, to some extent, changed such chaotic phenomena as low-level redundant construction and disorderly competition. Meanwhile, industrial silicon enterprises with large furnaces have made continuous efforts to achieve energy conservation and reduction and cost reduction by persistent technological transformation, thus making new breakthroughs in many aspects.

At the end of last year, China had 320 sets of 12500-25000KVA smelting furnace, which is the maximum furnace type in quantity at present and accounts for 77.3 percent of the total quality and the annual production capacity of which lingers about 2.75 million tons, accounting for 72.3 percent of the total quantity. Capacity of China's top ten industrial silicon enterprises rose from less than 18 percent of the national total in the past to 31.3 percent last year

It is noteworthy that though China's silicon industry has seen a full recovery, numerous challenges such as low added value of products, acute structural contradictions, insufficient innovation capability and constant international trade disputes still remain. How to transform from a big productive nation producing silicon industrial raw materials to a strong high-end manufacturer is an important task for future development of silicon industry.

The export of industrial silicon is witnessing a better market. According to statistics, China exported 390,000 tons of industrial silicon in the first half of the year, a growth of 27 percent on year-on-year basis, in which the monthly export of March and April exceeded 70,000 tons respectively. Insiders believe that in the context of sluggish global economy, every country has regarded such new energy as photovoltaic industry as major economic growth point. As a result, it is a precious development opportunity for China's silicon industry, with about 60 percent of industrial silicon capacity of the world.

In fact, the phenomena should be treated with a calm attitude for China's silicon industry. Ma Haitian believes that China is only a big country in production of silicon raw materials. Though China's whole industrial chain of silicon industry has been established, including industrial silicon in the upstream, polycrystalline silicon in the midstream and photovoltaic industry in the downstream, China's silicon industry mainly involves in production of low added-value silicon products and lags behind in high-end products. Currently, China's output of polycrystalline silicon, major raw material of photovoltaic industry, only accounts for about 30 percent of the whole industry, while that of organic silicon makes up a lower percentage.

Meanwhile, with further stabilization of production by large industrial silicon smelting furnaces and constant release of capacity, China's industrial silicon output will expect further growth. With heavy pressure of economic downturn, recovery of silicon industry is expected to be an optimistic investment field in the industry. Moreover, increasingly obvious enterprise reorganization and expansion will lead to new pressure for balance between supply and demand in silicon industry market. Therefore, vigilant attention should be paid to a new round of excess capacity.

Experts in the industry believe that attention should be paid to certain aspects to avert a new round of excess capacity. On the one hand, red line for environmental protection should be insisted, environmental protection inspection be enhanced, capacity expansion be strictly controlled, and backward productivity with high energy consumption and heavy environment pollution should be resolutely eliminated; on the other hand, progress should be made to integrate the industry, industry intensive management ability be improved via enterprise annexation and reorganization so as to form rational scale merits. In addition, intensive efforts should be made to construct consortium with upstream and downstream benefits closely combined by focusing on such strategic emerging industries as integrated circuit and photovoltaic so as to form international competition. Only wise and orderly advance and retreat and accelerated upgrade can lead to sustainable and healthy development of the silicon industry.