Wacker Chemie Rides Polysilicon Boost To Double Sales in 2021

One of the earliest global polysilicon manufacturers, German chemical group Wacker Chemie made the most of the massive surge in demand, and prices for key solar raw material polysilicon in 2021, which hit a decade high during the year. The firm doubled its polysilicon sales boosting  earnings even as it coped with higher raw material costs and higher energy prices in Europe. Readers will recall the polysilicon price spike ever since economies started opening up in 2021, exacerbated by US curbs on Chinese imports from Xinjiang province, where a large proportion of the world’s polysilicon manufacturing happens.

Wacker’s polysilicon business division sales almost doubled to €1.53 billion (US$1.71 billion), up from €792 million (US$885 million) in 2020. The division increased its EBITDA (earnings before interest, taxes, depreciation and amortisation) to €655 million (US$732 million), from just €5 million (US$5.6 million) in 2020. Despite a €500 million hit from higher raw material and energy costs.

This was a division that was seriously being considered for a shutdown or a hive off in 2019, in the face of relentless competition from China and lower margins. And now probably finds itself coveted by players worldwide, for both technology and volumes.

“The focus on high-quality polysilicon for semiconductor applications and further improvements in production costs also had a positive effect on the operating result,” said the earnings release from Wacker. The firm saw demand in 2022 remaining high, although some moderation in prices was expected.

In August last year, Wacker signed a long-term supply agreement with JinkoSolar for roughly 70,000 metric tons of polysilicon from September 2021 to December 2026.

Overall group EBITDA reached €1.50 billion in 2021, compared with €666 million in 2020, with its operating performance lifted by higher sales volumes, prices and ongoing efficiency measures.

Final EBIT (earnings before interest and taxes) increased to about €1.09 billion from €263 million in 2020.

However, the astounding recovery thanks to polysilicon prices is not pushing the group to any major capacity expansion, even as Chinese major Tongwei overtook Wacker to become the market leader by capacity worldwide.

The price volatility (rise) of 2021 can be traced back to  2020, when, due to aggressive capacity expansion by low-cost Chinese producers, almost 275,000 MT of annual polysilicon production capacity was shut down, an over two fold jump  over the the 135,000 MT lost during the earlier price crisis of  2010 and 2013. Players like South Korean polysilicon maker OCI, shut two of its solar-grade polysilicon plants in South Korea in 2020. Currently, the industry as more concentrated as ever, with the top five players having a 70% share of global production.

Among other countries, Indonesia has already announced a $4 billion plan to manufacture polysilicon, even as India’s Reliance also plans to enter the market to support its solar plans.