Xinte’s polysilicon sales contracts point to further expansion

China-based polysilicon manufacturer Xinte Energy has to increase its production capacity by 2023 at the latest in order to fulfill its three new five-year sales contracts with JA Solar, Longi and Wuxi Shangji Automation.

The three contracts were closed last September, December and this January, respectively. All three will run through December 2025, resulting in a total supply of 437,550 metric tons (MT). With a volume of 270,000 MT, Longi has secured the biggest chunk (see chart above).

Moreover, a three-year contract between Xinte and Wuhai Jingyuntong with a total volume of 32,000 MT is still running through December 2021. Since 12,000 MT will be delivered to Jingyuntong in 2021, not much more than 60,000 MT will remain for the other three contracts this year, given Xinte’s current annual production capacity of 80,000 MT and a utilization rate of less than 100%.

Therefore, Bernreuter Research estimates that the annual supply under the three new contracts will increase to 110,000 MT in 2025 to reach the contracted volume of 437,550 MT (see chart). These considerations make it obvious that the company has to expand its capacity by 2023 at the latest.

On January 13, Xinte announced that it “is now considering and exploring the possibility of an initial public offering of the Company’s ordinary shares traded in Renminbi.” Xinte has been listed on the Stock Exchange of Hong Kong since late 2015. The new offering of so-called A-shares, which trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, is slated to “expedite the Group’s entry into a new stage of development.”

That is obviously a cloudy circumscription of capacity expansion. According to unconfirmed Chinese sources, Xinte is planning to build a new polysilicon plant with a total capacity of 100,000 MT in Inner Mongolia; construction will reportedly start in the summer of 2021. If this information is correct, Bernreuter Research assumes that the first phase will comprise a capacity of 40,000 MT to 50,000 MT and will come on stream in the second half of 2022.

Xinte’s current production base is located in Urumqi, the capital of Xinjiang in western China – a region that has come under scrutiny because of the use of forced labor.