Throughout 2021, due to the mismatch of supply and demand in all links of the photovoltaic industry chain, the price of polysilicon materials soared all the way. Affected by this, the upstream polysilicon enterprises swept away the haze of the past and collectively ushered in the era of huge profits.
The world’s largest polysilicon and battery enterprise Tongwei Co.Ltd(600438) ( Tongwei Co.Ltd(600438) , 600438) released its performance express on February 13. After preliminary accounting, the company achieved an operating revenue of 66.602 billion yuan in 2021, a year-on-year increase of 50.68%; The net profit attributable to the shareholders of the listed company was 8.203 billion yuan, a year-on-year increase of 127.35%; After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies was 8.382 billion yuan, a year-on-year increase of 248.03%.
Surging news found that the net profit of more than 8.2 billion yuan not only set the highest profit record in Tongwei Co.Ltd(600438) history, but also made it one of the most profitable enterprises in the whole photovoltaic industry chain. The net profit of the company in 2021 is eight times that of 2016. At present, the annual production capacity of high-purity crystalline silicon reaches 180000 tons. With 50000 tons of Baotou phase II and 100000 tons of Leshan planned to be put into operation in 2022, its silicon material production capacity will reach 330000 tons by the end of this year. At present, the annual capacity of Cecep Solar Energy Co.Ltd(000591) battery of Tongwei Co.Ltd(600438) exceeds 40gw, and the total annual capacity of battery is expected to exceed 55gw by the end of this year.
High purity polycrystalline silicon (silicon material), known as “black gold”, is the basic raw material in the upstream link of the photovoltaic industry chain. After melting ingots or pulling crystal slices, polycrystalline silicon can be made into polycrystalline silicon and monocrystalline silicon respectively, which can be used to manufacture photovoltaic cells. The sharp rise of silicon material price accounts for the majority of Tongwei’s performance.
Tongwei Co.Ltd(600438) explained in the announcement that in 2021, benefiting from the growth of downstream demand, the supply of high-purity crystalline silicon products was in short supply, and the market price increased significantly year-on-year. The company’s high-purity crystalline silicon production capacity continued to operate at full capacity, with an annual sales volume of 107700 tons, a year-on-year increase of 24% and a significant increase in profit. At the same time, the company’s Cecep Solar Energy Co.Ltd(000591) battery and feed business segments operated steadily and maintained strong market competitiveness.
At the end of 2021, Tongwei Co.Ltd(600438) total assets reached 88.301 billion yuan, and the owner’s equity attributable to shareholders of listed companies was 37.47 billion yuan, an increase of 37.4% and 22.62% respectively over the end of the previous year.
Tongwei Co.Ltd(600438) originally, its main business was only aquatic feed that seemed irrelevant to new energy. When it landed on the Shanghai Stock Exchange in 2004, it was already the largest producer of aquatic feed in China. In 2007, Tongwei and Sichuan superstar group jointly invested and established Sichuan Yongxiang polysilicon Co., Ltd. in Leshan to enter the polysilicon field of photovoltaic upstream business. According to the financial report data over the years, the proportion of photovoltaic in the company’s operating revenue has increased year by year, surpassing the feed business in 2020. Its market value also rose. In July 2020, Tongwei Co.Ltd(600438) market value exceeded 100 billion yuan for the first time, and now exceeds 160 billion yuan.
There are also several other silicon giants making a lot of money:
Xinte Energy Co., Ltd. (Xinte energy, 1799. HK) expects that the unaudited profit attributable to the owner of the company will be no less than 5 billion yuan in 2021, and the net profit of the previous year was 695 million yuan, that is, a year-on-year increase of 619.40%.
Xinjiang Daqo New Energy Co.Ltd(688303) ( Xinjiang Daqo New Energy Co.Ltd(688303) , 688303) it is estimated that the net profit attributable to the owners of the parent company will be RMB 5.6-5.8 billion in 2021, with a year-on-year increase of 436.69% to 455.86%.
Poly GCL Energy Holding Co., Ltd. (poly GCL, 3800. HK) is expected to record a net profit attributable to the owners of the company of about 5 billion yuan in 2021 and a net loss of 5.7 billion yuan in 2020.
The performance of Hoshine Silicon Industry Co.Ltd(603260) ( Hoshine Silicon Industry Co.Ltd(603260) , 603260), the upstream of polysilicon manufacturers and the global leader in industrial silicon, is also greatly increased. It is expected that the net profit attributable to shareholders of listed companies will reach 8.5-8.7 billion yuan in 2021, a year-on-year increase of 505.28% – 519.52% compared with 1.404.3 billion yuan in the same period of last year.
Historically, the international spot price of polysilicon has climbed from US $35 per kilogram in 2005 to a historical peak of nearly US $500 per kilogram in 2008. Huge profits have attracted a large number of photovoltaic enterprises and other cross-border enterprises to invest heavily in the polysilicon industry. But soon, in 2009, the global financial crisis hit the photovoltaic industry, the price of polysilicon plummeted from $400 or $500 per kilogram, and a large number of enterprises went bankrupt. In 2011, the European and American double reaction hit, and the polysilicon price fell to a low level. In 2018, affected by the reduction of terminal demand, the price of polycrystalline silicon in China continued to bottom, once hitting a new low of about 76000 yuan / ton.
In 2021, polycrystalline silicon went out of the price curve beyond the expectation of the whole industry, soaring from 88000 yuan / ton at the beginning of the year to the highest point of more than 270000 in the year. The crazy rise almost ran through the whole year and transmitted to the whole photovoltaic industry chain, forming a series of rises in silicon wafers, cells and modules. The game, accusation and refutation between upstream and downstream are interspersed in the surging wave of price rise.
A silicon material enterprise once told the surging news that polycrystalline silicon has experienced several ups and downs in the past ten years. How crazy the rise is, how crazy the fall is. “From May to June 2020, all silicon material enterprises are losing money. The price fluctuation this year (referring to 2021) is also a market behavior. Although photovoltaic has experienced more than ten years of development, the investment and operation behavior is still irrational. This round of silicon material price rise is pushed up by the downstream, and the pot should not be carried by silicon material enterprises.” This view is not accepted by downstream battery and component enterprises. “Although the life of silicon material in 2020 is difficult, it can’t catch the opportunity and keep rising.
Who is driving up prices? This is related to the pricing mechanism and the periodic mismatch of the industrial chain. Under the tide of global carbon neutralization, the capacity of new energy development plans of various countries has been expanded, and China’s photovoltaic industry chain, especially the silicon chip end, has been expanding wildly. However, the production expansion cycle of silicon material link is long, and the large-scale silicon wafer expansion has aroused the anxiety of enterprises about silicon material supply, and they have signed long orders one after another. Under the condition of Limited margin, the price of silicon material traded sporadically in the market has soared, driving the price of silicon material to rise month by month. When the price of silicon rises, the silicon wafer sector benefits from the lock-in of inventory and orders. However, with the passage of time, the silicon material rises all the way, the time difference dividend gradually disappears, and the gross profit margin of silicon wafer decreases. In sharp contrast to the upstream raw materials, the net profit of battery and component enterprises fell sharply.
The ultra-high profit level is attracting a number of enterprises to accelerate the layout expansion in the silicon material link. Since the second half of last year, Qinghai Lihao, Hoshine Silicon Industry Co.Ltd(603260) , Jiangsu Sunshine Co.Ltd(600220) group, Xinyi solar energy, Geely technology and other new silicon forces have announced new project investment.
From the perspective of supply and demand, the feast belonging to silicon material manufacturers is not over. According to the prediction of surging news by many people in the industry, in the first half of 2022, considering the release rhythm of silicon material capacity and long order locking, it is expected that the silicon material as a whole is in a tight balance and may also rise in panic due to emergencies. Greater price reduction will occur only with the intensive release of new silicon production capacity in the second half of the year.
