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Relying on China WACKER complains about large impairment of polysilicon production assets
Source:Huatai     Pageviews:0     Release time:2019-12-11
I always thought that Germany's WACKER was the biggest winner of the Sino-US-European photovoltaic trade war, but did not expect that the report of this Munich-based polysilicon company cried out: a significant impairment of polysilicon production assets and a balance sheet impairment of 750 million EUR.
 
The scenery is gone and the windfall is over
 
Wacker Chimie, Hemlock was once two of the world's top polysilicon top suppliers. In the era of "owning silicon as the king", it once created a price of 500 euros / kg at a cost of 20 euros / kg.
 
In order to meet the global demand for polysilicon in the solar industry, the two giants are investing billions of dollars each in industrial parks in the state of Tennessee, Germany, to expand production. In the context of the Sino-US-European photovoltaic trade war, Hemlock announced the closure of the new plant on the day the commissioning was completed; WACKER benefited from the EU-China trade war understanding agreement to supply the world with new US polysilicon capacity and Europe ’s original capacity China became the biggest winner of the Sino-US-European photovoltaic trade war.
 
However, the biggest winner pointed out in a recent announcement: due to the lack of recovery of the photovoltaic project market, polysilicon prices continue to fall, and manufacturing capacity is excessive, this year will be forced to carry out a balance sheet value of about 750 million euros on its polysilicon production assets. Special write-down.
 
Cry to China, pass on contradictions
 
For its root cause, a WACKER spokesman believes that because China's new PV installations did not meet initial expectations, and China's polysilicon capacity was excessive.
 
WACKER's chief financial officer further accused: "The Chinese government is not only supporting the expansion of polysilicon capacity on loans and incentives, but is also providing coal power producers with polysilicon producers at extremely favorable prices."
 
Chinese companies ’crazy investment in polysilicon can not only lead to a substantial expansion of new ultra-pure polysilicon production capacity, leading polysilicon factories have also greatly reduced the cost of polysilicon manufacturing, and the prices have continued to hit new lows.
 
WACKER chose to emphasize that polysilicon overcapacity is caused by Chinese polysilicon producers, which means that polysilicon prices have not recovered from record lows.
 
This huge reversal has led to expectations of WACKER's polysilicon division's performance from optimism to an EBIT loss of about 750 million euros.
 
WACKER cited all the reasons for the impairment of the assets to focus on the Chinese government's policies, including the strategy of achieving self-sufficiency in solar-grade and semiconductor-grade polysilicon production. The government expects that the new installed capacity is far from reaching.
 
Take the blame, reveal it in depth
 
1. Hoarding strategy fails
 
Analysis of WACKER's production capacity, sales volume, output value and other data.Since 2019, WACKER's German polysilicon factory has been full. On the one hand, its US factory has not fully recovered after experiencing a big explosion. Reduce the cost of polysilicon, and stockpile in anticipation of price pick-up in the fourth quarter of 2019 due to rush installation.
 
However, due to China ’s PV installations being much lower than expected, the price of polysilicon in the fourth quarter of 2019 is still at historical low levels, and WACKER ’s strategy of hoarding polysilicon with low production costs has almost no chance of success.
 
2. Investment strategy mistakes
 
Misjudgment of the global trade war is the root cause of the impairment of WACKER polysilicon assets. In the face of strategic mistakes, no successful market tactics or performance can recover the defeat.
 
At the end of the last century, the silicone giants wanted to invest in Malaysia because the Asian financial crisis caused WACKER and Dow Corning to choose to invest in Zhangjiagang at the same time and enjoy the huge dividends of China's economic development in the new century.
 
However, at the beginning of this century, either in order to avoid the risk of putting investment in a basket in China, or to take into account the ultra-low electricity price in the United States, the two global polysilicon giants ignored the rise of Chinese photovoltaic companies. Ignoring the huge transportation costs of polysilicon materials from the United States' origin to Chinese customers, they have established their own "future polysilicon bases" in Tennessee, respectively.
 
Some people may say that before 2008, China ’s components and batteries were just emerging, and the top global component manufacturers were still American companies. Who can think of the market changing so fast.
 
What Zhuge Liang said afterwards is that it is not strange for ordinary people to make wrong decisions. How can Hemlock and WACKER, who have been cultivating in China for many years, ignore the magical laws made in China?
 
Today, a huge part of the global photovoltaic module and battery manufacturing capacity is in China. After the price of silicon materials has plummeted, it is obviously not cost-effective to ship polysilicon from the United States and Europe to China.
 
3. Being too deep in the Sino-US trade war
 
On the one hand, WACKER is the biggest winner of the Sino-US-European trade war. Hemlock is limited by US production capacity and can no longer compete with WACKER. In addition, since 2014, the processing of incoming materials has also blocked the tariff-free door. Hemlock has directly closed the polysilicon plant.
 
WACKER, by taking full advantage of coordinating its two major polysilicon production bases in Europe and the Americas, avoided trade barriers and smoothly supplied to the Chinese photovoltaic market.
 
Wack must have been laughing when Hemlock shed tears at the factory.
 
On the other hand, Wack laughed for a while, but didn't smile to the end. Who would have thought that the Sino-US trade war lasted for eight years!
 
In the past eight years, the global photovoltaic installed capacity has skyrocketed. The so-called installed capacity ranking before 2013 has been a fraction since 2014.
 
And WACKER's original production base in Germany simply cannot meet the global surge in polysilicon demand. The polysilicon capacity of WACKER or Hemlock was designed for the needs of the electronics industry. The new investment between the two parties in Tennessee is a modern significance factory that meets photovoltaic applications and is not at the same level as the original capacity. At the beginning of the double counter, WACKER's German base can also coordinate global production capacity and supply China with power. When the double counter enters 2015, the global polysilicon can only rely on the new polysilicon supply from China.
 
At this time, don't blame WACKER for what. WACKER is unable, unmotivated, and has no reason to invest in a new polysilicon production base in China because of the drag on investment in its Tennessee plant in the United States.
 
4. The Sino-US photovoltaic trade war has come well and will stop just right
 
Since 2011, the United States has begun a photovoltaic anti-China investigation against China, and officially confirmed it in 2012. Although the WTO's photovoltaic lawsuit has been repeatedly lost, the US Trade Commission still insists on countervailing photovoltaics against China.
 
It is said that the recent trade talks between China and the United States have eased, and it is likely that some tariff policies will be gradually phased out. However, even if the U.S. trade policy against China suddenly ceases from 2020, China's polysilicon companies have completed preparations for technology, quality, capacity, and cost, completed capacity expansion that began three years ago, and can fully realize self-sufficiency And supply the world at the lowest global cost.
 
Even if the photovoltaic trade war can stop, the believes that it must be stopped just right.
 
The United States International Trade Representative (USTR), for a European company like WACKER, is an out-of-pocket "pig teammate"!
 
In the United States, it is the SEIA American Solar Energy Industry Association that can fully understand the situation. It is because of their efforts that the tax rebate on solar investment in the United States can be continuously extended to save US photovoltaic installations, and double-sided modules can be returned to the 201 tariff list.
 
[Conclusion]
 
For WACKER, the only way to save himself can only be to look forward to the rise of European and American markets. If the price of polysilicon produced in the United States can be reduced and the investment in monocrystalline silicon wafers and cells in the United States can be driven, there will still be an opportunity to reduce the cost of photovoltaics in the United States. For Longji, GCL and others, I wonder if there is any opportunity to invest in the United States and use WACKER's domestic polysilicon materials to produce lower-cost batteries and modules?