After investing in a high-purity crystalline silicon project with silicon leader Tongwei (600438)***, LONGi Green Energy (601012) has signed a long order purchase agreement for polycrystalline silicon material with silicon giant Daquan Energy (688303).
November 30 evening, LONGi Green Energy announcement, in order to protect the company's stable supply of polysilicon material, November 30, 2022, the company and its nine subsidiaries and Inner Mongolia Daquan new energy limited company signed a long order of polysilicon material purchasing agreement, estimated that the total amount of the contract is about 67.156 billion yuan (excluding tax).
Institutions expect that, with the gradual lifting of the bottleneck in the supply of silicon, PV industry chain profits will be shifted from the upstream to the downstream, and the cell and module segments are expected to benefit from the process of industry chain profit redistribution.
In the secondary market, Morningstar data show that in October, JP Morgan's fund JPMChinaA-shareOpps increased its position in LONGi Green Energy by 7.4%.
LONGi Green Energy double-sided lock upstream supply
JPMorgan Chase in October to increase the position of 7.4%
November 30 evening, LONGi Green Energy announcement, according to the company's strategic planning and operational needs, in order to protect the company's polysilicon material a stable supply of the company, the company and its 9 Subsidiaries (hereinafter collectively referred to as "Party A") and Inner Mongolia Great New Energy Co. The quantity of polysilicon material is 251,800 tons.
According to the average price of polysilicon dense material of RMB 302/kg announced by PVInfoLink on November 24, the total amount of the contract is estimated to be about RMB 67.156 billion (excluding tax, the calculation does not constitute a price commitment).
On the same day, Daquan Energy also released an announcement of the same content.
Before signing the 75.887 billion yuan polysilicon material procurement contract with Daquan Energy, LONGi also joined forces with Tongwei, *** with the investment in the construction of high-purity crystalline silicon project.
Tongwei shares had announced on November 28, subsidiary Sichuan Yongxiang Co., Ltd. and LONGi Green Energy in the joint venture completed in Yunnan Tongwei 50,000 tons of high-purity crystalline silicon project based on *** with the investment in the construction of Yunnan Tongwei two projects and carry out the relevant cooperation to reach a **** knowledge, the two sides signed the "Yunnan Tongwei high-purity crystalline silicon Co. The two parties signed the "Supplementary Agreement on Capital Increase of Yunnan Tongwei High Purity Crystalline Silicon Co.
According to the agreement, the registered capital of the project company will be increased from the original 1.6 billion yuan to 5.6 billion yuan, of which Yongxiang new capital contribution of 2.04 billion yuan, LONGi Green Energy new capital contribution of 1.96 billion yuan. After the completion of the capital increase, Yongxiang shares hold 51% of the equity of the project company, LONGi Green Energy holds 49% of the equity of the project company, the project company is still a controlling subsidiary of Yongxiang shares.
Prior to this, Tongwei shares in August 2022 with the People's Government of Baoshan City, Yunnan Province, Changning County People's Government signed the "Yunnan Tongwei Phase II 200,000 tons of high-purity crystalline silicon green energy project investment agreement", planning to invest in the Baoshan Industrial and Trade Park, Changning Park Park, the construction of 200,000 tons of high-purity crystalline silicon green energy project and ancillary facilities, with a total investment of about 14 billion yuan, is scheduled to be within the year 2024 The total investment is about 14 billion yuan, and it is planned to be completed and put into production in 2024.
The two sides agreed, in Yunnan Tongwei before the second phase of the project put into operation, Tongwei shares will be based on the procurement agreement signed by the two sides to meet the LONGi green energy polysilicon procurement needs. After the commissioning of Yunnan Tongwei Phase II project, the two parties will take the polysilicon feedstock trading volume based on the target of LONGi Green Energy owning two times the equity production capacity of Yunnan Tongwei Phase II project, i.e., the actual output of Yunnan Tongwei Phase II project x 49% x 2.
In the secondary market, Morningstar data show that JP Morgan's fund JPMChinaA-ShareOpps latest size of about 37.6 billion yuan. As of the end of October, JPMChinaA-ShareOpps long positions include: LONGi Green Energy, Myriad Medical, Ningde Times, Kingsoft, Huichuan Technology, Guodian Nanrui, China Merchants Bank, Myriad Shares, Wuliangye, etc.; in October, JPMChinaA-ShareOpps increased its position in LONGi Green Energy by 7.4%.
Daquan Energy has signed 8 large orders since October
Sales amount totaling about 377.5 billion yuan
Daquan Energy (688303) on the evening of Nov. 30, the same announcement, recently signed a "Purchase Agreement" with Longi Green Energy (601012) and its nine subsidiaries. Purchase Agreement", is expected to purchase polysilicon material amounting to about 75.887 billion yuan; in addition, recently also signed a "polysilicon purchase and supply contract" with a customer, is expected to purchase an amount of about 8.335 billion yuan. The two sides agreed that the actual purchase price of the two sides to take the monthly bargaining method to determine, will be adjusted according to market conditions.
Previously, Daquan Energy has signed six polysilicon procurement and supply contracts with relevant customers.
On Oct. 13, Daquan Energy announced that it signed a polysilicon procurement and supply contract with Shuangliang Silicon Materials, a subsidiary of Shuangliang Energy Conservation, to supply the latter with 155,300 tons of polysilicon materials from 2022 to 2027, with an estimated sales amount of about 47.056 billion yuan. The actual purchase price will be negotiated on a monthly basis.
Oct. 17, Daquan Energy announced that the company and its wholly-owned subsidiary Inner Mongolia Daquan signed a Silicon Material Purchase Contract with a customer, and will supply 46,200 tons of polycrystalline silicon products to it in the next five years, with an estimated sales amount of about 13.999 billion yuan, and the actual purchase price is bargained on a weekly basis.
On October 25, Daquan Energy announced that the company signed a Purchase Framework Contract with a customer, and will supply 432,000 tons of polysilicon products to it in the next 6 years, with an estimated sales amount of about 130.896 billion yuan. The actual purchase price will be negotiated on a monthly basis.
On November 3, Daquan Energy announced that the company and a customer signed the Polysilicon Procurement Cooperation Agreement, which stipulates that from October 2022 to December 2027 a customer is expected to **** to the company and Inner Mongolia Daquan to purchase 57,600 tons of solar-grade polysilicon special-grade no-wash monocrystalline feedstock, with an expected purchase amount of about 14.696 billion yuan.
November 7, Daquan Energy announced that recently the company and a customer signed a "polysilicon procurement and supply contract", the expected procurement amount of about 41.511 billion yuan (including tax).
On November 19, Daquan Energy announced that it had signed a Purchase Agreement with a certain customer, which stipulates that from January 2023 to December 2027, a certain customer is expected*** to purchase 148,800 tons of solar-grade first-grade, no-wash lump material from the company, in accordance with the average price of polysilicon dense material as announced by PVInfoLink's latest (November 16, 2022), which is 30.3 million per ton (including tax), the estimated purchase amount is approximately RMB45.086 billion (including tax).
The total amount of polysilicon procurement and supply contracts signed by the above eight polysilicon procurement and supply contracts is about 377.466 billion yuan, which is 34.85 times of Daquan Energy's total revenue in 2021.
Silicon capacity release
Industrial chain profit will be shifted to the downstream
Photovoltaic industry chain is divided into four major segments, namely, silicon material, silicon wafers, batteries, and modules, from the top to the bottom.
Since September, for the continued sharp rise in silicon prices, the Ministry of Industry and Information Technology and the Development and Reform Commission had successively shot, the Ministry of Industry and Information Technology and other departments collectively interviewed some of the polysilicon backbone enterprises and industry bodies, the Development and Reform Commission and other strict investigation and deal with the dissemination of false information on price increases, hoarding, and other price-raising behavior, as well as monopoly agreements, the abuse of dominant position of the market and other monopolistic behavior.
On the supply side, since 2022, the major mainstream silicon manufacturers have continued to expand production capacity, improving the situation of silicon shortage. According to agency estimates, silicon capacity is expected to grow 25% in the fourth quarter from a year earlier.
According to the statistics of China Nonferrous Metals Industry Association's Silicon Branch, the domestic silicon material production capacity totaled 519,000 tons in 2021, and the actual output was 498,000 tons.
At the end of 2022, the domestic silicon material production capacity will reach 1,203,000 tons, and the annual output is expected to be 820,000 tons, which is a year-on-year increase of 320,000 tons.
In 2023, the silicon material production capacity will be further released, and at the end of 2023 it is expected to reach 2.404 million tons.
Previously, the silicon industry branch of experts in the relevant investment and research meeting said that the future price of silicon material will eventually return to 100,000 / ton. The logic of falling silicon prices from the downstream conduction upstream, component side will first start rate down, resulting in less battery purchase, battery start rate decline, and then the battery to buy fewer wafers, and finally wafer start rate decline, wafer prices fell.
November 27 evening, TCL Central announced the latest wafer offer, P-type and N-type wafers are lower than the last round of offers. Previously, LONGi Green Energy publicized the latest round of silicon wafer offer shows that the company also cut the monocrystalline silicon wafer offer. It is worth noting that the two PV leaders just at the end of October downward silicon wafer offer, which means that the silicon wafer offer has been two consecutive declines.
And in the "wafer duo" successive price cuts, the mainstream silicon prices have also slightly reduced.
With the price of silicon silicon material down, downstream demand is expected to increase, in favor of downstream performance upward repair.
From the past construction situation, after entering the fourth quarter, the domestic ground power station will generally enter a comprehensive installation stage. 2022 the first three quarters of the domestic component bidding scale of more than 124GW, has exceeded the 2021 annual bidding volume of nearly three times, to the end of 2022 will exceed 150GW, for the fourth quarter of the ground power station installation and next year's demand for the outbreak of the installation of lay the foundation.
Chuan Cai Securities expects that, with the decline in silicon prices, the past two years in the background of high component prices backlog of ground power station demand will be released in 2023-2024, is expected to 2023 domestic PV demand is expected to reach 130GW, up 45%, of which 2023 centralized demand of about 70GW, up 75%; distributed about 60GW, up 9%. 9%. At the same time, with the gradual lifting of the bottleneck in the supply of silicon, the industry chain profit will also be transferred from the upstream link to the downstream, the cell and module link is expected to benefit from the process of redistribution of industry chain profit.