South Korea’s leading polysilicon supplier OCI Co. is seeking to raise funds to expand its polysilicon output in a preemptive move to further cement its leading position in the global polysilicon market.

According to multiple industry sources on Friday, OCI is pushing to sell OCI SE, an environment-friendly cogeneration plant in Saemangeum Industrial Complex that began operations in April. The move comes after it recently raised 7 billion won ($6.1 million) after selling its stake in GL PharmTech Corp., a provider of drug formulations in Korea. If the company successfully sells off OCI SE, it is expected to raise about 200 billion won in total.

The company has officially noted that the sale is aimed at recouping its investment made on the companies, but sources from the solar energy industry believe that OCI has been attempting to raise funds to increase its polysilicon output, a necessary move to further expand its position in the photovoltaic industry.

OCI successfully returned to operating profit in the second quarter ending June this year after the polysilicon price rebounded. But since then, Chinese polysilicon suppliers have been rapidly expanding their output, increasing the risk of oversupply and weighing on the price of polysilicon. The polysilicon price once skidded to $12 per kilogram and recovered to $13 last week. According to industry observers, as a break-even price for polysilicon is about $15 per kg, industry-wide restructuring seems to be inevitable amid rising polysilicon output by Chinese players.

An unnamed official at OCI tipped that the company is currently mulling over buyouts of existing plants rather than building new ones as part of efforts to add its own polysilicon output. Building a new plant would be too costly for the company, and even more so if it is based in Korea as it would be difficult to match profitability, the official added. OCI earlier this year announced it scrapped its plan to build its fourth and fifth plants in Saemangeum Industrial Complex in Korea.

The company is currently in negotiations to acquire Tokuyama Malaysia Sdn Bhd. with an annual polysilicon output of 20,000 tons from Japanese polysilicon maker Tokuyama Corp. and is expected to complete the deal by end March next year, another company official said.

OCI is now the world’s third largest polysilicon producer churning out 52,000 tons a year and a possible buyout of Tokuyama Malaysia would help it narrow the gap with the world’s first and second largest polysilicon producers with an annual output of about 70,000 tons, each. Such an increase in output is also expected to make it impossible for second-tier peers to catch up OCI any time soon.

By Chung Wook

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