(Yicai Global) Dec. 12 -- Though the supply of quartz sand, a raw material used in solar silicon wafer processing, is expected to be tight for the foreseeable future, the impact of the shortage on China’s silicon wafer industry is not expected to be as great as the polycrystalline silicon shortfall of recent years, industry insiders said.

Quartz sand’s main use in the photovoltaic industry is in quartz crucibles, a key consumable used in silicon wafer processing. Amid a shortage and booming demand due to increasing silicon wafer production capacity, its price has surged to between CNY70,000 and CNY80,000 (USD10,030 and USD11,460) a ton from CNY20,000 to CNY30,000 at the year’s start, according to sources in the photovoltaic-grade quartz crucible industry.

“Demand for quartz crucibles to make silicon wafers will probably continue to grow as the supply of silicon materials increases in the next two to three years, and their price will stay high or even increase,” Yao Yao, a new energy and electrical equipment chief analyst at Sinolink Securities, said at an annual PV industry conference earlier this month.

The gap between supply and demand of high-purity quartz sand will widen quarter by quarter from now to the end of next year, and supply will remain tight, Citic Securities also said in a research report.

Still, higher quartz sand prices will have a limited impact on silicon wafer prices because unlike silicon materials, it only accounts for a small proportion of the total production cost of a silicon wafer, a senior industry insider told Yicai Global.

Meanwhile, the quality gap between Chinese and international suppliers also makes domestic producers less attractive to potential investors at a time of shortage.

“At present, China-made quartz sand can only be used to make the outer or middle layers of quartz crucibles, depressing actual demand,” said Shi Zhenwei, a PV analyst at Shanghai Metals Market Information and Technology.

For the inner layer, which needs higher technical standards, only imported higher-quality quartz sand is accepted by wafer makers, Shi noted.

The gap in supply of imported quartz sand is about 4,000 tons to 5,000 tons this year, which is the amount needed to produce 32 gigawatts of silicon wafers, Shi said, while the gap in supply of China-made quartz sand is only about the equivalent of 7 GW to 8 GW of wafers.

Only two companies, one American and one Norwegian, can produce quartz sand for the inner layer of quartz crucibles and are not expanding their capacity, so the shortfall will mainly be of imported quartz sand, Yao noted.

China’s supply gap in quartz sand for quartz crucibles’ inner layers will increase to 16,000 tons next year, so prices will climb more than expected, Orient Securities said in its research report.

China’s Pacific Quartz, the only other company in the world that can provide high-purity quartz sand, is speeding up its production capacity expansion, though its product quality is still lower than its two overseas counterparts.

Jiangsu province-based Pacific Quartz is expanding its high-purity quartz sand output capacity, with a total of 60,000 tons of annual capacity under construction that is expected to come online next year, it said in a Dec. 8 note.

Editors: Tang Shihua, Futura Costaglione