Jiangsu Sunshine's subsidiary, Ningxia Sunshine Silicon Industry Co., Ltd. (Ningxia Silicon), is under scrutiny for alleged violations and has faced significant financial losses, raising concerns about the future of the polysilicon industry in China. Despite a price commitment agreement between China and the European Union on photovoltaic exports, Chinese manufacturers continue to face challenges in the global market. The situation reflects a broader downturn in the sector, with only a handful of companies still operational out of over 40 in the country.
Last weekend, Jiangsu Sunshine announced that it had received administrative measures from the Jiangsu Securities Regulatory Bureau, which ordered the company to submit a written rectification report due to its failure to disclose information about the shutdown of its Ningxia subsidiary. According to Director Xu Weimin, the delay in disclosure was partly due to uncertainty about whether the polysilicon business could recover. However, with Ningxia Silicon now in bankruptcy liquidation, the company has ruled out further involvement in the photovoltaic industry.
The regulatory body also raised concerns about the company’s decision-making process regarding the bankruptcy of Ningxia Silicon. Xu explained that the subsidiary suffered severe losses, making it unable to meet its debts. As a creditor, Jiangsu Sunshine applied for the bankruptcy and obtained court approval, which was publicly announced at the end of January this year. However, regulators believe the news should have been disclosed earlier, such as when the bankruptcy application was filed.
In addition to the regulatory issues, the financial performance of Ningxia Silicon has been dire. Since its establishment in 2006, the company invested heavily in a 4,000-ton/year polysilicon project in Ningxia. However, by 2008, the market had collapsed, and despite early production efforts by other companies like GCL-Poly and Daxin New Energy, Ningxia Silicon struggled to remain competitive. By 2012, the company reported a gross loss margin of -21%, with total liabilities exceeding assets, and annual losses reaching RMB 247.4 million.
Jiangsu Sunshine’s investment in the subsidiary led to a massive impairment charge of RMB 1.5 billion in 2012, contributing to a net loss of RMB 1.36 billion for the year. Analysts from Shenyin Wanguo note that the overall polysilicon industry is in poor shape, with many companies operating below capacity and production levels declining significantly.
While some analysts suggest that anti-dumping measures imposed by the Ministry of Commerce on imported polysilicon may help stabilize domestic prices, the market remains volatile. Although temporary tariffs were introduced on imports from the U.S. and South Korea, no definitive action has been taken against EU companies. With the industry facing continued challenges, the outlook for polysilicon producers in China remains uncertain.
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