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Polysilicon shortage and price hikes intensified amid power rationing and production cuts

September 29, 2021 PV InfoLink

CN TW EN

Polysilicon

Silicon metal prices nearly doubled within a week, surging to RMB 50,000-60,000/MT, owing to production cuts and manufacturers’ reluctance to sell, and thus significantly pushed up costs of polysilicon. With skyrocketing production costs and difficulties in acquiring sufficient silicon powder, it’s reportedly that polysilicon was priced as high as RMB 230-260/kg.

As stated in June, once polysilicon prices surpass RMB 220/kg, it will have direct impacts on end users. Therefore, the unexpected price surge this time hammered the PV market, overwhelming the entire supply chain, which was just about to see the installation rush begin. Against this backdrop, activities during October and December remained obscured.

Presently, most polysilicon manufacturers have not released official price quotes, as industrial silicon price hikes continued. On the other hand, it’s unbearable for manufacturers delivering modules at prices agreed earlier as polysilicon prices have reached RMB 220/kg and beyond. As a result, no order was signed between Tier-1 manufacturers, despite successive record high polysilicon price quotes. Anecdotally, however, some medium-sized wafer makers accepted a price of around RMB 230/kg and have closed few deals.

Utilization rates of Tier-1 module makers will drop during China’s National Day holidays, but pressures will not be felt by cell and wafer sectors immediately. Given that, polysilicon prices may stay on an upward trend in the near term, amid fears for polysilicon shortage.

Wafer

A RMB 260/kg high polysilicon price quote is estimated to pile up mono-Si wafer production costs by more than RMB 0.07/piece. Leading mono-Si wafer makers may raise pricings again, while most wafer manufacturers have not done so by far, awaiting further changes within the market. Negotiations for October prices will continue after the holidays. This week, prices sustained at last week’s levels.

With current cell and modules prices, the two sectors can hardly accept wafer price hikes. The wafer sector, being caught in the crossfire of upstream price surge and downstream prices’ inability to rise accordingly, will start to see impacts on utilization rates in late October.

Cell

Wafer productions sapped, as energy intensity caps and power rationing in China continued, sending raw material costs to rise ceaselessly. Cell manufacturers recently trimmed down utilization rates from the end of September to October. Overall, utilization rates in October will return to the 50%-70% lows. With anticipations for further wafer price hikes, cell manufacturers are poised to raise prices after the National Day holidays. Still, prices saw few movements this week, chiefly owing to soaring production costs and the coming of the holiday. The market remained cautious, with no new order being signed up to this Wednesday. Prices for orders already signed sustained, sitting at RMB 1.12-1.15/W for G1 and RMB 1.05-1.06/W for M6, whilst M10 and G12 cells saw prices averaging at RMB 1.07-1.08/W and RMB 1.02-1.04/W, respectively.

Vertically integrated companies ceased cell procurements this week, whilst inventory draws of medium and small-sized module makers slowed. Subject to power rationing, most module makers retain production of large format products. Prices for M6 cells can hardly go up as demand waned in the downstream; M10 cells saw a few trading volumes in the high-price range, with prices rising to RMB 1.09-1.1/W.

This week, prices for multi-Si cells sustained at RMB 3.7-3.85/piece. Further price trend is treated conservatively, given difficulties in acquiring multi-Si wafers.

Module

Module production costs rose incessantly, as energy consumption caps and power rationing exacerbated EVA and backsheet shortages, driving up BOM costs and prices in mid and upstream sectors. With several Tier-1 manufacturers going to shut down over the National Day holidays, module utilization rates from late September to October dropped. Tier-1 module makers revised down utilization rates by 15-20%, whilst that of Tier-2 and Tier-3 gradually contracted, as subject to raw material costs and difficulties in acquiring them.

Module prices remained chaotic this week. As production costs continue to soar, some vertically integrated companies ceased delivering, fulfilling previous orders for M6 glass-back sheet modules and glass-back sheet modules rated beyond 500 W, signed respectively at RMB 1.82-1.85/W and RMB 1.85-1.88/W. Price quotes for new orders saw huge differences with previous ones, coming in above RMB 1.9-2/W.

Overseas markets also saw manufacturers halt deliveries and price quoting. Sellers and buyers were still negotiating by far. Considering limited cost durability of the end user sector, prices for utility-scale PV stations have yet to be settled. Trading prices are expected to edge up in October, with current price quotes approaching to USD 0.27-0.28/W. Stalled by the lofty price quotes, some end users have been negotiating for delivery deferrals. Presently, prices on the distribution market continued rising, with that for M6 modules coming in above USD 0.25-0.265/W in Europe and Australia. Production costs still saw rising momentum. As a result, module prices will fluctuate during the fourth quarter this year and the first quarter next year. Further price trends are left unclear, as production costs remained up in the air.

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