OCI Followed by Hanwha Solutions Withdrawal... Solar Power Industry Lights Going Out
China's Low-Price Offensive and Oversupply Deal the Final Blow
[Asia Economy Reporters So-yeon Park, Yoon-joo Hwang] The domestic solar material industry is facing a crisis due to China's low-price offensive. Following OCI, Hanwha Solutions is also considering withdrawing from the domestic business amid a sharp drop in the international price of polysilicon, the basic material for solar panels.
According to the industry on the 12th, Hanwha Solutions, a producer of polysilicon for solar use, is closely reviewing the withdrawal from its domestic polysilicon business. A Hanwha Solutions official explained, "Polysilicon production is only at the Yeosu plant in Korea," and added, "We are currently flexibly adjusting the operating rate of the Yeosu plant." If Hanwha Solutions decides to exit the polysilicon business, it is expected to focus on its main solar cell and module production going forward.
If Hanwha Solutions stops its polysilicon business following OCI, there will be no domestic manufacturers of solar materials (polysilicon, ingots) left in Korea. OCI announced the day before that it plans to halt production of polysilicon for solar use at its Gunsan plant. It will withdraw two of the three production lines at the Gunsan plant and upgrade the remaining line to focus on semiconductor-grade polysilicon production.
Previously, polysilicon manufacturers Nexolon and SMP went bankrupt in 2017, and Korea Polysilicon entered corporate rehabilitation procedures in 2018. Woongjin Energy, the only domestic manufacturer of ingots and wafers, filed for court receivership in May 2019. This means the domestic supply chain for solar components, from 'polysilicon-ingot-wafer-cell module,' has completely collapsed. China's low-price offensive and oversupply were the decisive blows.
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Currently, the international price of polysilicon has plummeted to $7 per kilogram, about one-thirtieth of its peak price. This is significantly below the break-even point of $13 to $14 for domestic companies. OCI recorded an operating loss of 180.7 billion won last year, turning to a deficit due to this situation. OCI had made significant profits until 2011 after developing polysilicon in 2008, but Chinese companies, backed by government subsidies, launched a low-price volume offensive, plunging OCI into a deficit.
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