REC Silicon to suspend production at Washington State polysilicon factory

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REC Silicon plans to suspend operations at its Moses Lake polysilicon production facility in Washington State from March 1, “unless trade negotiations between China and the United States yield tangible indications that REC Silicon’s access to markets in China will be restored, or other significant positive developments occur in the marketplace”.

The facility, which makes polysilicon for solar markets, operated at less than half its 18,000 metric ton (MT) capacity last year. REC Silicon was forced to lay off around 100 employees in July, and in September local members of the U.S. Congress wrote to President Trump warning of the plant’s impending closure, and urging the White House to “find an immediate resolution to the trade dispute over Chinese solar panels and American polysilicon”.

China imposed tariffs on polysilicon imports from the U.S. in 2014, effectively cutting off REC Silicon and other producers in the country from the world’s largest market.

REC says, without temporarily curtailing operations at Moses Lake it will not be able to meet cashflow requirements for its semiconductor materials operations. Moses Lake could remain shuttered, said the company, “until market conditions improve and/or the facility can be operated at increased production and higher capacity utilization”.

 

Losses in the quarter

The plan to close the facility was announced in the company’s financial filing for the fourth quarter of 2018. The figures showed, despite improved revenues compared with the previous three-month period, REC’s solar materials business contributed a loss of $9.1 million, to drag the business to an overall EBITDA loss of $3.8 million.

Quarterly revenue for the solar materials unit came in at $9.9 million, an improvement on the previous quarter’s $6.2 million. The company warned, however, demand remained soft after China’s 31/5 announcement to rein in public PV subsidies, and that overcapacity placed pressure on prices. REC Silicon realized a 16.6% price decline for prime grade polysilicon during the quarter.

The outlook for the company’s operations in China – a joint venture with Shaanxi Non-Ferrous Tian Hong New Energy Co. Ltd, in which REC Silicon currently holds a 15% stake – appears more positive. The joint venture produced 5,400 MT of polysilicon last year – including 1,850 MT in the final quarter – and utilization rates at the facility continued to rise. Siemens reactors at the facility were commissioned and demonstrated production of Czochralski (monocrystalline) grade polysilicon.