Photovoltaic silicon yo-yo

Solar photovoltaic (PV) polysilicon suppliers have suffered rapidly dropping plant utilization rates during 2012, as reported by Solarbuzz.

The industry typically reports 90% utilization. Current usage has fallen below 70%.

With high fixed costs, factory utilization is a key driver of product cost and profitability.

Near term, this means PV cell and module makers are trimming inventories and limiting production output. Long term contracts are being renegotiated and/or supply timelines pushed out.

In the medium term, this may mean a hiccup in turning on silicon availability once demand growth returns to the industry, just like a free wheeling yo-yo that hesitates before it rises.