Canadian Solar notes challenges to UMG suppliers as polysilicon prices fall17 March 2009 | By Mark Osborne | News > MaterialsMost Popular ArticlesSempra selects First Solar for 50MW addition to El Dorado plant, says analyst
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Canadian Solar executives said during a conference call to discuss fourth quarter and year-end financial results that polysilicon prices had fallen to between US$110 per kg and US$130 per kg. This had enabled the module manufacturer to renegotiate UMG silicon feedstock prices to approximately US$60 per kg, maintaining a US$50 per kg margin between the two feedstocks. Canadian Solar uses UMG silicon in its ‘e-modules’ and has already secured contracts for these lower (15%) priced modules in 2009, equating to 120MW.
The challenge for UMG suppliers, acknowledged by Dr. Shawn Qu, Chairman and CEO of Canadian Solar during questioning by financial analysts, is that he expects polysilicon prices to drop to approximately US$70 per kg, pushing UMG pricing to between US$15 per kg and US$20 per kg by the end of 2009.
At the recent Photon Technology Show, held in Munich Germany at the beginning of March, 2009, Photon Consulting market researchers, noted that the significant increase in polysilicon and lower than anticipated demand due to project finance constraints amongst others could see prices fall to as much US$30 per kg.
Although the supply chain dynamics have become complex and highly changeable, financial analysts were concerned in the conference call that should polysilicon prices fall to US$50 per kg or below, UMG’s cost advantages could simply evaporate, destroying the UMG market in its path.
Dr Ou countered this line of argument to some extent, noting that Canadian Solar was working closely with its two UMG suppliers to improve the quality of the material to boost conversion efficiencies of cells as well as internal efforts that had already seen over 1% efficiency improvements in the last year.
Dr Ou also noted that cell efficiencies using UMG silicon had reached 14.7% in 2008, up from 13.3% in 2007, with a clear roadmap to take efficiencies up to 15.5%, though no timeline was given.
“We expect to achieve wafer to module processing costs of $0.60 per watt and polysilicon to module processing costs of $0.90 per watt by the end of Q2 2009,” noted Dr Ou.