Polysilicon Bonanza: Rising Supplies, Sinking Prices

[OKIsItJustMe]

http://blogs.wsj.com/environmentalcapital/2008/03/11/polysilicon-bonanza-rising-supplies-sinking-prices/

March 11, 2008, 1:00 pm

Polysilicon Bonanza: Rising Supplies, Sinking Prices

Posted by Dana Mattioli

Matthew Dalton reports:

Polysilicon producers have feasted over the past two years on the profits caused by soaring prices for the material, which is a key ingredient of solar cells. As demand for solar energy has soared, the price of polysilicon has gone bonkers, with prices on the spot market ten times as high as they were in 2004.

But the party may be coming to an end: Global polysilicon production is expected to double over the next two years. That should bring some sanity to the market – and cut into the enormous profit growth seen by polysilicon producers over the past two years.

How far will prices come down? Way down, according to a number of market participants. A kilogram of polysilicon can fetch around $475 on the spot market right now. “We believe that long-term the price of silicon should get back to the $50 to $60 per range,” said Mike El-Hillow, chief financial officer of solar cell maker Evergreen Solar, at a conference in February. “It is a commodity. It’s very complex from a technology standpoint for sure, but the technology is known and it is not patented.”

Silicon is the Earth’s second-most abundant element, comprising nearly 26% of its crust. But before it can be used in solar cells, more than 99% of all impurities must be removed in large chemical plants. These facilities are springing up around the world, and existing ones are being expanded.

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