Leo Ho: All right. Thanks management for the time today. My first question is regarding the FBR on granular silicon. We noticed that there are several major module makers, including for example, [indiscernible] and JKS. Suggesting that the FBR doping ratio, now they can do around 50% for N-type wafer. I just wonder if we can share any update on this FBR [user situation] (ph) and what’s our take and then why we’re seeing such a sudden increase in the doping ratio? Thank you.
Ming Yang: I think on the FBR, at least based on feedback from our customers is that it continues to have high levels of contaminants and higher surface metal and higher hydrogen and higher carbon. So I think, the challenge with most of the wafer producer is that the hard carbon content actually leads to breaking of the [water salt] (ph). And then also the contamination and also the hydrogen jumping issue means less amount of poly can be used per run. So if you use FBR, you have a slight reduction in production yield per run on the ingot. And that’s the main reason why customers require a discount and currently primarily use it as a mix. In the previous understanding, the mix is between 10% to 30%. But I think, every producer probably has a slightly different mix.
And I think, some the main player, these players are also our customer, but I think I don’t they want to diversify their sourcing or maybe they want to lower their costs, right? So I mean, they are always looking for lower cost sources to the extent that they can use, right? So we’re not surprised that they have — some kind of agreement. And these agreements are always, at least in China, almost always — these are kind of framework agreements, right? So the volume and pricing is adjusted on a monthly basis.
Leo Ho: Understood. That’s very clear. My next question is regarding the price gap for different type of polysilicon, say for example, N-type versus P-type, and then also for N-type high-quality polysilicon that we produce against FBR, what are those price gaps going to look like right now and also looking forward? Thank you.
Ming Yang: I think consistently, the N-type poly has had price premium in the range of maybe RMB5 to RMB10 per kilogram I think currently, it is somewhere in the RMB7 to RMB8 per kilogram still, even at the current pricing. While FBR is generally priced at a discount to the P-type poly generally. But probably FBR has different grades, right? But within N-type and P-type, there is also different grades generally related to the form factor of the surface structure. Yes. So it’s not like one single price, it’s usually a range of price.
Leo Ho: And my last question is regarding electricity tariff for our [Baotou and Xinjiang] (ph) capacities. Would there be any like electricity tariff changes that we expected for this year or for next year?
Ming Yang : [No] (ph), we expecting any electricity tariff adjustments on the electricity rates?
Leo Ho: Thank you so much. Exactly, thank you.
Ming Yang : Okay. I think for Xinjiang, we are expecting the rate to be very stable. I think the rate has been fixed. The previous adjustment was mostly related to I think a policy issued by NDRC that kind of forbid, in a single entity type of energy price structure. At the same time, it also coincided at a time where the coal prices was at a higher price. So our utility company, actually was losing money on the power sales to us, on the power they generated. So after the rate adjustment, that’s no longer the case. And we continue to have the most favorable utility rate for that local utility for the region. And we are still competitive, but we don’t expect that to change, or the rate to change. I think similarly for Inner Mongolia — Inner Mongolia already had an adjustment, I think around in the first half of 2023, I believe also based on the NDRC rule.
So now the Inner Mongolia rate structure is actually a market based structure, where actually the rate is not fixed, it’s actually floating based on market supply and demand for the utility market. But because we buy a significant portion of our power comes from renewables and renewable pricing utility is lower than coal for the Inner Mongolia grid. And also we have the most preferential pricing for the whole local grid there. So we do think we have a very, very competitive utility price there, and we don’t expect that to change. It’s already been adjusted.
Leo Ho: Thank you so much for the additional color. These are all from my side. Thank you.
Ming Yang: That’s great. Thank you. Operator [Operator Instructions] The next question comes from Phil Shen with ROTH MKM. Please go ahead.
Philip Shen: Hi everyone. Thanks for taking my questions. Sorry about the technical difficulties earlier. I would like to explore price just a little bit more. Can you give us a sense of pricing beyond this year as well? Do you think there could be some recovery next year. And we have seen price decline recently. And some of the experts that we’ve been consulting with suggest that prices will continue to decline as we go through the year. So wondering if you can give us a view of 2025? Thanks.
Ming Yang: Okay. We do think pricing is probably at the bottom, or if not at the bottom, near the very bottom. It’s already below cash breakeven price for a lot of the producers. We think 70% to 80% — we think starting in the next two months or so, we will start to see shutdown — we’re already starting to see shutdowns and we will see more shutdowns going forward. So if this say persists through Q3, we think some of the producers will run into cash problem. And then if we goes into next year, I mean — we might see an OCI-like type of shutdown right? I think some of the investors might remember OCI shut down in [2020] (ph). I think that was — they kind of gave — so I think if price stays low, we will see this kind of condition.
We don’t think price can stay this low until say through next year. Certainly, you will have much lower production of poly than – poly is not sufficient to service the market and the demand growth. And then some of the current market condition is due to inventory adjustments, right? So I mean, ultimately, the downstream customers will need to restart buying again, right? Because they bought probably more than they need, say, in the first half of the quarter and then when [technical difficulty] their expected demand or price increase did not materialize in the second half of March, that’s when they slowed down the stock ordering. So it’s kind of the market behavior that’s creating kind of the volatility that we are seeing in the market.
