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Updated October 16, 2018

Ever since China released the 531 policy, all sectors of the PV supply chain witnessed a rapid downtrend in prices. For the Chinese market, polysilicon for both mono and multi wafer use experienced a price decline of over 30%. The mono and multi wafer markets witnessed a 27.4% and 24.1% of price drop, respectively. For the wafer sector, the increasing slice capacity caused by the transfer of the diamond wire (DW) technology has made this sector with the most excessive supplies, leading to continuously lower prices. 

Polysilicon Factories To Move West; Shares of Polysilicon for Mono Wafer Use to Rise

Tough market condition forced companies to keep pushing down costs. Many polysilicon companies have either moved or expanded their factories to regions with low electricity prices such as Xinjiang, Inner Mongolia, and Sichuan to reduce electricity costs. By 2019, total polysilicon capacity will increase 60% from 181,500 tons in 2018 to 295,500 tons in Xinjiang, Inner Mongolia, and Sichuan. These regions will take up 70% of the total polysilicon capacity in China. 

Since multi wafer is gradually replaced by mono wafer, share of mono wafer will increase to 47% by the end of this year. In addition, share of mono wafer is expecting to reach 57% in 2019 owing to the following reasons –

  1. The polysilicon production for mono wafer use basically can scale up to 70% of new polysilicon capacity. New capacities will be released continually.
  2. Top-tier polysilicon makers will sign agreements with leading mono wafer makers such as the long-term strategic cooperation between Zhonghuan and GCL Silicon / Longi and Yongxiang.
  3.  Multi demand will remain weak. 

Old Ingot Equipment to Be Moved Out; New Capacity to Focus on Mono 

In order to seize the market share of multi wafer, the mono wafer market has started to lower prices strategically in the beginning of this year. This brought tremendous pressure to multi wafer makers. In addition to that, there’s the impact from China’s 531 Policy too. Because of these factors, multi wafer prices have already dropped below cash costs before July. Yet, it’s not likely for multi wafer prices to sharply decline further as prices have almost hit the bottom. Meanwhile, ingot-growing cost for multi wafer still decline by RMB 1/kg every quarter. If ingot-growing cost is to go down further, manufacturers can only move factories to regions with lower electricity prices, including Inner Mongolia, Xinjiang, and Yunnan. 
Like polysilicon, wafer manufacturers started to move factories to regions with lower electricity prices. What most companies would do is to directly change their productions to mono wafer productions. For example, Canadian Solar not just moved its 1GW multi ingot factory to Baotou, Inner Mongolia, but also has a mono ingot capacity of 2GW; Ht-Stech also planned to build a mono wafer factory in Baotou with an initial capacity of 1.5GW and another 1.5GW at the second-phase. Ht-Stech may move its multi wafer factory in Yangzhong follow-up later; and Trina Solar’s 6.5GW plan includes a 3GW mono ingot capacity and move out the existing multi wafer capacity to Inner Mongolia.

Slicing Process Using Professional Machines to be Outsourced; Ingot-Growing and Slicing Divided into Two Segments

Currently, companies started to move ingot equipment to regions with relatively lower electricity prices. They will keep the slicing process in Jiangsu and Zhejiang. Manufacturers specialize in conducting the slicing process began to appear in the market and they will take the lead to lower the slicing cost. According to the OEM price of JSXT Solar’s slicing process, the minimum price reached RMB 0.395/piece for multi wafer slicing and RMB 0.34/piece for mono wafer slicing. Over the past year, the DW slicing for multi wafer was mostly conducted through modified machines, but it will be mostly conducted using professional machines after late-2018 to lower costs. Overall, manufacturers tend to outsource the slicing process and divide the ingot-growing and slicing business into two segments to reduce costs. On the other hand, the OEM price of professional machines will force the existing modified machines to be eventually eliminated from the market.    
Furthermore, the diameter of DW is expecting to be smaller. Although multi wafer slicing has been significantly hindered and the wire breakage rate has increased when the wire diameter is currently smaller than 65µm, Meyer Burger’s new diamond wire saw machine lowers the wire diameter to 50µm and may even reduce it to 40µm in the future in hope to increase wafer pieces output. If the related technologies and quality of DW mature, slicing cost per piece can be lowered further. Consequently, costs of wafer slicing can still go down. 
Moving factories to regions with low electricity prices is the only way for polysilicon and wafer sectors to reduce costs due to the higher polysilicon capacity month by month and the continuously lower wafer prices. Wafer companies that are unable to move equipment limited by capital and are located in regions with high electricity prices or have many old equipment capacities will leave the market. As for the competition between mono and multi, companies will focus more on building mono capacities judging from the increased percentage of polysilicon production for mono wafer use and the new plan for wafer. The multi market will witness limited expansion owing to weak demand. Therefore, the output of mono wafers will surpass multi wafers in 2019.

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