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SNEC Wrap-Up III: Solar price trends

August 14, 2020 PV InfoLink

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Before SNEC 2020 taking place, polysilicon prices soared during late July to early August due to polysilicon shortage. Strong uptick in trading prices for polysilicon for mono- and multi-Si wafers then lifted wafer and cell prices.

Polysilicon 

On the supply side, three polysilicon producers (Daqo New Energy, TBEA, and East Hope) have further reduced their utilization rates since Daqo New Energy’s and GCL’s polysilicon factories in Xinjiang exploded in July, the COVID-19 pandemic-induced logistic delays in the region, two mega-tonne-scale producers (Yongxiang’s Leshan-based factory and East Hope) were under maintenance program, and Xinjiang-based polysilicon makers inspected their old production lines under a government directive.

With polysilicon for mono-Si wafers running even shorter in supply but still in demand from downstream, orders for polysilicon for mono-Si wafers are very likely to be signed at higher prices in August. Polysilicon for multi-Si wafers are also in short supply as manufacturers are producing increasingly less of polysilicon for multi-Si wafers, with some having reduced the share of it to less than 5% of the total production. As a result, polysilicon prices for multi-Si wafers have been rising on stable multi demand every week since early July. On the whole, polysilicon shortage has become more serious than expected, and it may reach its peak in September.

As end-market demand in overseas markets is recovering during Q3–Q4 and mono-Si wafer makers continue to run at full capacity and bring online new production lines, polysilicon demand is growing on a monthly basis. As a result, there will be a prominent polysilicon shortage throughout Q3. Downstream manufacturers are therefore raising their prices, allowing the trading price for polysilicon for mono-Si wafers to surge. Overall, polysilicon shortage will become even more serious between July and August than the previous period, and polysilicon prices for mono-Si and multi-Si wafers will be trending upward over the two-month period. However, the prices may stabilize in Q4, when polysilicon shortage is expected to ease.

Wafer

Mono-Si wafer manufacturer giant Longi raised prices for a third consecutive week after polysilicon prices jumped. The company reflected the increased costs from polysilicon immediately, making price adjustment announcement on Aug. 12, with G1 and M6 wafer sitting at RMB 3.1/piece and RMB 3.25/piece, respectively, up by RMB 0.0.6-0.7/piece (with discounts having been canceled) comparing with their levels at the end of June.

The price quotes offered by mono-Si wafer makers ahead of SNEC were close to the level Longi published on July 31. However, Longi announced price adjustment again two days after the end of SNEC because polysilicon prices have moved wildly recently, pushing price upward pressure to the downstream segments. 

At present, Tier-1 cell makers have to accommodate the recent increases in mono-Si prices. PV InfoLink reckons that, price negotiations will remain at a standstill in the up and downstream segments amid surging mono-Si wafer prices. However, G1 and M6 prices will gradually reach RMB 3.1/piece and RMB 3.25/piece, respectively. While the trading prices depend on negotiations, prices for the two formats are both on the rise. It’s expected price increase in mono-grade polysilicon will lead to an immediate price increase in mono-Si wafers for the short term. 

Cell

As polysilicon prices were said to rise to as high as RMB 98/kg during SNEC, mono-Si wafers may fetch even higher prices. The rapid increases in prices for polysilicon and wafers have pushed up price quotes for cells, with Tier-1 maker Tongwei’s prices published on Aug. 10 having risen by 9% from RMB 0.89/W at the end of July to RMB 0.97/W (for G1 and M6)—an increase higher than market expectations.

Not much new orders were signed. Many cell manufacturers put inquires for new orders on hold after Tongwei raised prices. While cell makers are negotiating larger orders, most of them believe that it’s not likely to raise prices to RMB 0.97/W; most of the orders have been signed recently are long-term contracts that are agreed at RMB 0.85–0.86/W. Direct purchase orders saw G1 and M6 mono-Si wafers rising marginally to RMB 0.9-0.91/W and RMB 0.92-0.93/W, respectively.

But unlike producers in up and midstream segments, module makers can hardly raise their prices to cover ballooning costs. As most module makers have clinched deals for the second half of this year, they are unable to raise module prices much and this places downward pressure on cell makers. Even though price quotes for cells have increased, the actual trading prices have not achieved much increase. Bargaining over cell prices is going to last for a while and how the prices will change might not be clear until after some time.

Multi-Si cell prices have improved fractionally to RMB 2.6/piece as wafer prices continue to rise and India’s multi demand is recovering. Yet, multi-Si cell business will see even more deficits as overall multi-Si demand will continue to weaken and it’s difficult to raise prices for multi-Si cells despite a surge in multi-Si wafer prices.

Module

Module makers have reflected the increased costs, raising price quotes from RMB 0.1-0.2/W to RMB 1.6-1.7/W in China and by USD 0.01-0.015/W in overseas markets. Amid surging prices bid prices for large projects unveiled recently saw an increase to RMB 1.5-1.6/W, but other than that not much orders were signed with higher prices.

In fact, many projects would be postponed for grid-connection if modules are priced higher than RMB 1.6/W. Meanwhile, quite many foreign countries have extended grid-connection deadlines until next year due to COVID-19. At present, module prices remain in chaos.

Conclusion

Impacts of the sharp price rises sent ripples to the cell and module segments as well as end users. Since module orders in the second half of the year have mostly been signed, it’s difficult for module makers to raise prices. And this limits price increase in cells. With polysilicon and wafer prices going to rise continuously but module prices remaining flat and therefore cutting production, cell makers will be facing increasingly high pressure. Cell prices may be the first to decline in Q3 as manufacturers continue to bring new capacity online. However, wafer manufacturers won’t feel the downward price pressure immediately as they hold advantage in bargaining. Overall, how prices will move depends on results of price negotiations in each segment of the supply chain. 

 

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