On the supply side, four polysilicon makers are maintaining production lines and equipment throughout July. Logistics hiccups amid escalating COVID-19 pandemic in Xinjiang caused delays in the delivery of polysilicon orders by the four producers. All these events have conspired to exert great pressure on wafer makers with low polysilicon stocks.
Meanwhile, a Xinjiang-based mega-tonne-scale polysilicon factory that encountered an industrial accident at the end of last week has been entirely shut down for post-accident inspection. This factory is the second one in Xinjiang to have been hit by an explosion this month. On the demand side, demand for polysilicon for mono-Si wafers is growing every month—as polysilicon stocks are shrinking in up- and downstream and mono-Si wafer makers are operating at full capacity while bringing online new production lines according to schedule.
On the whole, with polysilicon for mono-Si wafers running short in supply but still being in demand from downstream, deals for polysilicon for mono-Si wafers are highly likely to be clinched at higher prices in August. There have been a modest number of new orders for polysilicon for mono-Si wafers because existing ones are being filled.
Hit by a growing undersupply, polysilicon for mono-Si wafers is being quoted at higher prices and sold at a wild array of market prices. Against this backdrop, this week’s polysilicon prices for mono-Si wafers rose to RMB 67/kg at the high-priced end, posted RMB 59–67/kg, and stayed at the previous average trading price of RMB 60/kg. The prices will become relatively certain next week, when Tier-1 makers negotiate new deals. By then, the average polysilicon price for mono-Si wafers will rise by RMB 5–7/kg in the market and be mutually settled down between buyers and sellers.
Polysilicon prices for multi-Si wafers continued to climb this week to RMB 36–38/kg in the market and RMB 37/kg on average because of shortage. Indeed, manufacturers are producing increasingly less of polysilicon for multi-Si wafers, with some having reduced the share of multi-grade polysilicon to less than 5% of the total production; logistic hiccups are prevalent in Xinjiang due to the COVID-19 pandemic; and a factory in the region has been shut down following an explosion.
This week’s overseas polysilicon prices climbed by USD 0.1/kg for mono-Si wafers and USD 0.2/kg for multi-Si wafers owing to undersupply-induced increases in Chinese polysilicon prices. Overseas polysilicon prices came in at RMB 6.8–7/kg for mono-Si wafers and RMB 4.9–5.4/kg for multi-Si wafers and they are likely to improve further in the near future for both types.
While Longi’s prices for mono-Si wafers remain unchanged, the market price averages RMB 2.26–2.42/piece for G1 and RMB 2.42–2.51/piece for M6 in China and USD 0.297–0.306/piece for G1 and USD 0.312–0.317/piece for M6 in overseas markets. Longi is going to announce its prices for August around July 25; the announcement of the prices will have a profound influence on polysilicon, wafer, and cell sectors.
Mono-Si wafer supply continues to outstrip demand as operating producers have been running at full capacity since the start of this year and are commissioning new production lines according to schedule. Having said that, the ongoing COVID-19 pandemic and a recent industrial accident in a Xinjiang-based polysilicon plant have contributed to the shortage of polysilicon for mono-Si wafers, prompting price quotes for mono-Si wafers to increase by varying extents. But only a handful of deals were struck; mono-Si wafer prices remained unchanged this week.
Multi-Si wafer prices did not change much this week, versus their previous levels, coming in at RMB 1.1–1.17/piece in the market and RMB 1.15/piece on average. The prices may show some change in the future as some producers are negotiating prices for new orders. The shortage of polysilicon for the wafers and a stable outlook for multi demand across the supply chain, the prices may pick up slowly in the near future.
Although the explosion in a polysilicon factory in Xinjiang and the COVID-19 pandemic in the region made wafer prices and price quotes for cells seem likely to increase, this week’s mono-Si cell prices remained stable at RMB 0.8–0.81/W for G1 and RMB 0.8–0.82/W for M6 as cell makers were still in the midst of executing previous orders.
Further quoted prices for the cells may increase. Some producers have suspended negotiations for orders. Some newly clinched deals have been reversed for price renegotiation; price quotes for August have climbed by RMB 0.02–0.03/W and even RMB 0.04–0.05/W. How mono-Si cell prices will be faring depends on how much wafer prices can increase, although the cell prices may not improve much due to the decline in module prices for the second half of this year.
The M2-sized cell price averaged RMB 0.82–0.83/W this week, but as demand for such cells is going to shrink in August, it can hardly improve if wafer prices do pick up. Instead, the price will be on the decline.
The average multi-Si cell price, which hovered at RMB 2.2/piece this week, is nudging producers closer to their break-even points. Some producers have mulled cutting production or shutting down prematurely.
Polysilicon shortage may not just cause the costs of wafers and cells to increase; it also can lead to uncertainty over module prices. Cell prices now look likely to pick up, and so do the price for PV glass due to strong Chinese demand. While module deals for the second half of this year have mostly been clinched at RMB 1.4–1.45/W, quite a few were struck at RMB 1.35–1.4/W or even lower levels. As prices for cells and PV glass are likely to increase, module makers are once again inching close to break-even points, and those with orders at less than RMB 1.4/W are keen to renegotiate prices with end customers.
However, since Tier-1 module makers have ambitious shipment targets to meet this year, renegotiating prices may undermine their shipments for the year and even their long-term customer relationships. So, although the producers are eager to raise prices, they are biding their time while staying up-to-date with how much prices in up-and midstream and for bill of materials will increase.
At the end of the day, considering the rising costs of materials for modules, module makers that offered quotes at aggressively low levels for orders in the second half of this year will face challenges in controlling costs and negotiating prices.