China flood forces Tongwei to cut polysilicon capacity by a quarter

BEIJING (Reuters) - Tongwei Group, a Chinese feedstock and solar raw material supplier, is forced to shut down a quarter of its polycrystalline silicon, or polysilicon, capacity due to an unusually severe flood in southeastern China.

Tongwei’s polysilicon-focused subsidiary, Yongxiang Co, on Tuesday closed its 20,000-tonne plant in Leshan city in Sichuan province, as the city issued a Level I flood alert, the highest on its four-tier scale.

Polycrystalline silicon is a raw material used by the solar photovoltaic industry to make cells.

“The city is encountering a once-in-a-century flood. We received a notice this morning from local emergency management bureau to stop production immediately,” said a spokesman at Tongwei Group.

“We have evacuated all workers from the plant and will wait further notice from the emergency bureau to reopen.”

China’s biggest river, the Yangtze, and several of its tributaries have risen to dangerous levels after days of heavy rain, forcing tens of thousands of people from their homes and triggering an unprecedented emergency response alert.

Tongwei has a total of 80,000 tonnes of annual polysilicon production capacity, accounting for nearly one fifth of China’s total capacity.

Polysilicon prices have increased more than 60% since mid-July after GCL-Poly Energy owned plant in northwestern region Xinjiang was reported experiencing an output disruption.

China Silicon Industry Association expected the upward trend of polysilicon prices may persist until September due to supply shortages.

In July, China produced out around 28,200 tonnes of polysilicon, down 14.4% from a month ago.

Analysts from Citi in a note last week also warned higher solar module prices, thanks to rising raw material prices, could curtail ultimate installation demand due to reduced return from solar farm investment.

China installed 11.5 gigawatts (GW) new solar capacity in the first half of 2020. A researcher from a think tank affiliated with China’s National Energy Administration expected last month that China’s full year new solar installation to reach 40-43 GW.

Reporting by Muyu Xu and Tom Daly; editing by David Evans