Original debut |Golden Horn Finance (ID: F-Jinjiao).
Author |East Fence.
Tongwei shares shot again.
Recently, against the backdrop of the continuous decline of polysilicon, polysilicon giant Tongwei Co., Ltd. plans to invest 28 billion yuan to build a high-purity crystalline silicon project with an annual output of 500,000 tons of green substrates (10,000 tons of industrial silicon) in Ordos, Inner Mongolia, to further increase photovoltaic production capacity.
Tongwei said that the first phase of the project will build 200,000 tons of industrial silicon and 200,000 tons of high-purity crystalline silicon production capacity, and strive to be completed and put into operation by the end of December 2025.
According to incomplete statistics, this is the fourth expansion plan of Tongwei in 2023, and Tongwei's expansion plan this year covers almost the entire photovoltaic industry chain from industrial silicon to photovoltaic modules, with a total project amount of up to 64.5 billion yuan.
On the other hand, there are concerns about "overcapacity" hovering over the head of the photovoltaic industry, and Tongwei, which is expanding production against the trend, where is the confidence?
28 billion, Tongwei expanded production against the trend
For example, in 2006, when the polysilicon industry was booming, Tongwei made great efforts to "lie down and taste courage" in technology, and became the industry leader several times. This expansion may also be a hope to repeat the success of the past.
Nowadays, the "avalanche" of polysilicon has been "avalanche" since the second quarter of last year, and it is regarded by the industry as the arrival of the bottom signal.
According to the latest news from the Silicon Industry Branch, the average transaction price of n-type polysilicon is 680,000 tons, down 029%；The average transaction price of monocrystalline dense material was 5950,000 tons, down 1 from the previous month16%。Compared with the highest 250,000 tons in the first quarter of last year, it fell by more than 75%.
Source: Straight flush** pass.
Tongwei is the winner of the contrarian expansion in the last cycle. At the end of 2018, the polysilicon industry had overcapacity, and the polysilicon industry basically hovered at 60,000-80,000 tons in 2019-2020. At the end of 2018, Tongwei chose to expand the total production capacity of Leshan Phase I and Baotou Phase I to 60,000 tons, and finally seized the opportunity of the outbreak of the PV demand cycle in 2021.
Polysilicon is the most high-tech link in the entire photovoltaic industry chain, and it is also the core raw material of the entire photovoltaic new energy, Tongwei's refined management experience accumulated in the previous aquatic feed business and the scale effect obtained by several contrarian expansion have made the production and operation cost of its polysilicon business lower than that of its peers, and correspondingly, Tongwei's polysilicon gross profit has been maintained at more than 30% all year round, and the gross profit margin in 2021 is as high as 667%。Until now, with an average price of about 60,000 tons, Tongwei's production cost of 3-40,000 tons is still profitable.
In addition to Tongwei, on December 13, 2023, Daqo Energy also announced that it would invest 15 billion yuan to build a silicon-based new material industrial park, including polysilicon, industrial silicon, round silicon core and other project production lines. Industry giants such as LONGi Green Energy, JinkoSolar, and JA Solar have also invested tens of billions of yuan to expand production against the trend, and many companies have also carried out large-scale recruitment and personnel reserves.
In other words, the leading enterprises basically ignore the pressure of "overcapacity" and expand against the trend. According to incomplete statistics, from the beginning of 2022 to the end of April 2023, more than 460 projects are planned to expand the domestic photovoltaic industry chain.
The whole industry has rushed to the top, and the "contrarian" track has also become crowded, and the continuous decline of polysilicon ** has eventually led to an overall decline in the profitability of manufacturers. For example, Tongwei and Daqo Energy's revenue and net profit in the first three quarters of 2023 have declined sharply: Tongwei's revenue in the first three quarters increased by 9% year-on-year15%, but the net profit attributable to the parent decreased by 24% year-on-year98%；Daqo Energy's revenue fell 47% year-on-year81%, and the net profit attributable to the parent company decreased by 66 year-on-year09%。
Some people in the industry believe that this year, the photovoltaic manufacturing end will completely shift from the previous upstream and downstream profit differentiation pattern to the overall small profit or even loss of the whole industrial chain, and some enterprises with poor management or poor cost control will be eliminated first.
Many manufacturers, including Daqo Energy, TCL Zhonghuan and CSG A, have announced changes to polysilicon-related projects, including project delays and slow progress.
Schrödinger's "overcapacity".
Regarding the overcapacity of the photovoltaic industry, there are two views in the market, one is mainly overcapacity at the data level, and the other is the argument that "advanced capacity will never be overcapacity".
According to the data of various institutions, by the end of 2023, the global production capacity of polysilicon, wafers, cells, and modules will exceed 800GW. If all expansion announcements are made on schedule, the production capacity of polysilicon and cells will exceed 1,100 GW, and the production capacity of wafers and modules will reach 900 GW, which will far exceed the module demand of 480GW-550GW in 2023 and 2024.
Today's supply and demand situation does show signs of overcapacity, with the planned layout of the new capacity in the previous two years of the upward cycle in 2023 to be released one after another, the main links of the photovoltaic industry are over, and are suffering from the impact of price reductions.
Taking the export value as a reference, according to the statistics of the Photovoltaic Industry Association, in the first ten months of 2023, the exports of silicon wafers, cells, and modules increased year-on-year, respectively, but the total export value in the same period was nearly US$43 billion, a year-on-year decrease of 24%。In particular, the module segment has dropped by about 50%, resulting in a decline of 4% in export value6%。It is understood that the N-type module ** tendered by Guodian Power has officially fallen below 1 yuan watt in December last year.
At the same time, since the second half of 2023, there has been news of insufficient operating rates in many links of the photovoltaic industry chain. A person in charge of a wafer company said: "The average operating rate of the industry is 50%-60%, and several leading companies can maintain it at 70%-80%. ”
Recently, Li Zhenguo, President of LONGi Green Energy, made a speech, which indirectly confirmed the "overcapacity theory" of the photovoltaic industry"There is already significant overcapacity in the PV industry, and in the next two to three years, more than half of China's PV manufacturers may be forced out of the market. ”
However, there are also views that the photovoltaic industry is currently in a period of adjustment of phased and structural surplus, for example, the solar cell technology, which is crucial to the efficiency of photovoltaic power generation, is in the upgrading period, and backward production capacity will enter the elimination cycle.
Zhuang Yinghong, Global Marketing Director of Risen Energy, said: "At present, solar cell technology is in the transition period from p-type to n-type, and from the order of this year (2023), TOPCon and heterojunction products are becoming more and more popular. In the future, it is impossible for all enterprises to continue to adhere to the P-type route, and the advanced capacity of the photovoltaic industry is not excessive. ”
According to the research report of China Post**, in terms of product structure, the proportion of N-type module bidding has increased from about 20% at the beginning of 2023 to 60% in November, and the proportion of N-type module procurement in the centralized procurement projects of central energy enterprises has generally reached more than 70% since the fourth quarter. N-type modules will become the mainstream products of domestic centralized installation in 2024.
Therefore, from this point of view, some analysts believe that Tongwei's latest expansion in Inner Mongolia can be understood as leveraging the advantages of local electricity prices and upstream and downstream supporting facilities in the industrial chain to continue to expand advanced and low-cost production capacity, thereby accelerating the iterative upgrading of advanced technologies and the clearance of backward technology production capacity.
For PV companies, including Tongwei, it usually takes 1-2 years for polysilicon production capacity to reach production from production, and the current technological transformation of the industry is still in the early stages, which means that even giants still have the need to clear "backward production capacity".
Under pressure, Tongwei pinned its hopes on the future. At the 6th China International Photovoltaic Industry Conference in 2023, Liu Hanyuan, chairman of the board of directors of Tongwei Group, once said, "In the future, the potential and growth space of the photovoltaic industry are still huge, and the industrial surplus will almost be in a short period of time, half a year, a year or a little longer to achieve a new balance." ”
Mismatched 2026?
The photovoltaic industry is a typical cyclical industry, and from the perspective of the history of the development of China's photovoltaic market, the photovoltaic industry seems to be unable to escape the "curse" of a five-year cycle.
Behind the cycle is a mismatch between supply and demand. In the photovoltaic manufacturing chain, the existing production capacity and planned production capacity of the four major links of "polysilicon material-silicon wafer-cell-module" are different, and the pace of investment and construction and the speed of ramp-up and production are also different.
Source: Straight flush.
For example, the launch period of new upstream polysilicon capacity is significantly longer than that of other segments, with a typical polysilicon capacity construction period of about 12-18 months and a ramp-up period of about 3-6 monthsThe wafer production capacity construction period is about 4-10 monthsThe capacity build-up period for cells and modules is shorter.
Under the different upstream and downstream capacity construction processes, polysilicon production capacity cannot meet the short-term surge in market demand. Therefore, polysilicon materials are prone to disconnect in the expansion of the whole industry chain, and in the short development history of the photovoltaic industry, there have been several times when the market pattern of "silicon is king" has appeared.
In addition to polysilicon, Tongwei has also entered the solar cell and module business, and the integrated layout can enhance industrial synergy, operational stability and capacity digestion. The "Fishery and PV Integration" project, which integrates Tongwei's long-established aquatic business, is also a major feature of Tongwei that distinguishes it from other photovoltaic companies.
However, whether the photovoltaic industry can usher in a major trend in 2026 depends on whether the downstream market demand can truly accommodate such a large-scale planned capacity.
From the perspective of power market demand, the traditional thermal power and hydropower have been basically satisfied, and the expansion speed of the national grid is slow, the absorption of new power is limited, and the instability of new energy generation has higher requirements for energy storage, which takes time to improve.
However, under the guidance of the national goal of carbon peak and carbon neutrality, photovoltaic new energy still has considerable prospects, and the future of the photovoltaic industry is still infinite with the burst of AI electricity demand and the development of battery energy storage. This is also an important reason why many photovoltaic companies buck the trend to expand production and gamble on the future.
According to the latest data from the National Energy Administration, renewable energy has become a new force to ensure power in China, with an installed capacity of 14500 million kW, accounting for more than 50% of the country's first-class power generation capacity, historically exceeding the installed capacity of thermal power. At present, the country's power generation capacity is about 2.9 billion kW. Among them, so far in 2023, wind power and photovoltaic power generation have exceeded the domestic electricity consumption of urban and rural residents in the same period, accounting for more than 15% of the electricity consumption of the whole society.
ThereforeIn the case of a good industry, the core of the development of photovoltaic enterprises in the future lies in the enhancement of their own competitiveness and the reduction of production costs.
But the cruel and wonderful thing about it today is that the end is still not yet here, and anything is possible.
Reference: The Economic Observer "Photovoltaic Industry Restarts the Knockout Competition".
Cover report "Polysilicon "Black Gold"".
China's ** newspaper "No Fear of Excess!".Polysilicon giants expand production capacity by 28 billion yuan!》
Hemu Investment Research "An article to understand the photovoltaic industry, in-depth research, recommended collection!".》