Market Trends for Rare Earth and Polysilicon

I just watched the movie “Margin Call” last night and it reminded me of how volatile the markets for Rare Earth materials and Polysilicon are. I know of several companies that won’t buy Polysilicon because the price was still going down. Although this last week the spot price did rise ever so slightly. For internal company reasons/politics, many companies won’t do dollar cost averaging which is essentially to keep buying as the price goes lower or higher. This would ensure them that they don’t pay the highest or lowest price but it will all average out. Since the price can be lower many companies don’t buy like this because if the price drops they feel they will be paying too much and that they might have egg on their face. Conversely, companies don’t have the problem of buying when the price goes up. I guess it’s another example of irrational exuberance.

In the movie there was extreme volatility (CMO, MBS, etc. from the Wall Street meltdown of 2008) and that’s what we are seeing now. Prices at all-time lows, prices inflated but now dropping, etc. Truth of the matter is that prices will settle down eventually. People will come to their senses once many have already succumb to the frenzy. In “Margin Call”, Jeremy Irons said “It’s not panicking if you sell first”. In the new year I feel that prices will stabilize as they always do. Because if prices have dropped 50%, for example, does the risk represent the same risk before the price drop? Even though there is increased volatility the price drop does not increase your risk but rather decreases it substantially. Warren Buffet has argued this point endlessly.

My opinion is that prices will stabilize and these markets will resume to normal in the coming year. Necessity is the mother of invention and we desperately need some stability. The market will show some bumps but, as always, will come back to normal after weeding out the ones who were either late to the party or panicked and left the business all together.

AHP Materials is a leading provider of High Purity Elements and Compounds serving industrial, research, and institutional needs.

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The Death of Polysilicon

OK, just kidding on the title. But you have to believe that the market for polysilicon has surely taken a beating. The lows reported this week on Polysilicon Prices is $25 a kilogram. That’s about half the price as it was this summer and well below the actual cost to produce polysilicon.

Now that we got that out of the way the real story here has yet to be unfolded. What will this mean to the industry? What does this mean to consumers? What does it mean to the green movement for the environment? Well, I don’t have all the answers but lower polysilicon costs should create lower prices for solar panels and thereby less cost for the consumer. Lower costs means higher demand and usage and potentially a good push for the green movement. That’s in a perfect world but if the solar panels are affordable for houses and other installations and the ROI is solid then this could be great…just not for the manufacture companies of polysilicon.

The word on the street is that it’s hard to justify putting a $30,000 solar panel installation on your roof if the payback is 7 or more years. If that number came down to 3 years then it only makes sense that there would be a plethora of people taking advantage of this. To finance that would make it even easier. When I get my electric bill (I live in Texas so summers are hot and A/C is on all the time) I tend to cringe. If my bill was knocked in half and I had only 3 years to pay for it that would easily be a no-brainer. I feel others are probably with me on this. I know it sometimes takes time for the low-cost to reach the end-user but the sooner the better especially since this industry wants to hit the main stream and not just the early-adopters.

AHP Materials is here to provide industrial customers with high purity materials.

Slow and steady does not win the race

In speaking with a colleague he told me that some new materials out on the market will not be big until 20 years from now. “It’s better”, he said, “but it’ll take 20 years until it really hits commercial applications.” If better was better why isn’t the adoption of new materials or processes go faster? I could see 6 months or even a year…but 20 years?

In the Pharmaceutical industry it takes roughly 12 years and $800 million to develop a new drug. Half the cost is the cost associated to tying up the $400-$500 million dollars to develop the drugs and failed tests/ideas along the way. If you invested $400 million 12 years ago you would probably hope that to be worth $800 million today (unless you invested in the stock market). Do you seriously remember what you were doing 12 years ago? Neither do I.

The point is that there are some fantastic breakthroughs with materials that we won’t be able to see in a very long time come to fruition for some very same reasons. I firmly believe that research is done and people sparingly test the use of it until there is the 100th Monkey epiphany. I guess in a way it’s that until a collective conscious comes along to try or move a product or solution to make it all happen. If enough people are doing it then it’s acceptable on many different levels. The world is flat and the center of the universe was once common understanding. Imagine being the first one to say that the world was round and the sun was the center. Or the second, or the third… Kind of like saying the Indianapolis Colts will win a game this year (sorry for the cheapshot Indy).

My point is that we shouldn’t have to wait for great ideas, products, or materials to hit a collective consciousness for them to gather the needed steam. We need more Apple Computer companies, more Steve Jobs, more Bill Gates, more Xerox Park ideas (but not their management), more innovators and doers. Those people that make things happen and shake up industries.

After all, are we men or monkeys? We are doing our best to get the leading edge high purity materials for your research and industries and you are the people that make it happen! We look forward to working with you at www.ahpmat.com

Monday Afternoon Elements

They have Monday Morning Quarterback so I felt it was apt to have Monday Afternoon Elements. What I mean by that is if a sport can be analyzed with 20/20 hindsight why can’t the world of elements, particles, and materials be?

So let’s start with the discussions on Polysilicon Prices. What is going on there?  According to www.pvinsights.com the price of Polysilicon is being sold at an average of $32.20 as of 11/30/2011. While that is not shocking what is shocking is what I’ve heard of prices are actually much lower than that. More like the $24 range in some parts of China. Here is where it gets interesting. Not many people are selling or buying at that but that in itself is telling me people are hurting enough to sell at that price.  The prices have come down so much that the cost to produce 1 watt of solar power from the manufacturer in China is now near $1. That means a 5kw solar system could be had for $5,000. Except for installation and integration with the grid that is a very nice price. In layman’s terms, that’ll cover the 72% of the electricity needs for the average US home. Not a bad investment.

Sound good, right? Here’s the bad part…if China produces this and floods the US market with inexpensive solar that could essentially wipe out the US manufacturers pretty quickly. The reason is that you can’t compete with the low pricing models they have. The USA must be seriously thinking of instituting tarrifs on China for these types of products. But, since the USA exports so much production equipment to China you could expect the same in retaliation. That, in itself, would stifle the solar movement even though affordability would surely move it to save on emissions and oil dependancy, let alone long-term savings for many American families.

Will it be a catch22?  Only time will tell…

Remember, you can always get your elements, compounds, CIGS, and other high purity materials at www.ahpmat.com

Elementary, my dear Watson!

Interesting enough, that phrase “Elementary, my dear Watson” was never used in the more than 60 stories that Sir Arthur Conan Doyle wrote about Sherlock Holmes. Holmes said “elementary” and “my dear Watson” enough but never were the two phrases spoken together.

That’s kind of like compounds. Individually they exist to do their part but together they become important and known like they were always together from the beginning. CIGS is like that. CIGS stand for Copper Indium Gallium Selenide. Separate they are just individual metals and elements. Together they help harness solar energy and are important for many industries, especially the solar power industry. But the end use helps industry and residential customers alike. Not only to harness the power of the sun but also to save money, the environment, and create new jobs.

So, if you say “Elementary, my dear Watson” the catchphrase might not be accurate to the stories it was credited from but the symbolism is.

CIGS and other materials related to it are always available via AHPMat.com