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Updated July 29, 2020

Polysilicon

This week, Tier-1 producers clinched new deals for polysilicon for mono-Si wafers, but due to a series of explosion at GCL’s polysilicon factory in Xinjiang and the ongoing COVID-19 pandemic in the region, polysilicon deliveries were disrupted. Meanwhile, two mega-tonne-scale producers—Yongxiang’s Leshan-based factory and East Hope—has been maintaining production lines since this month, and in the wake of the explosion, the Chinese government demanded that Xinjiang-based producers inspect their older production lines. Against this backdrop, the three producers are expected to further reduce their utilization rates.

On the whole, polysilicon shortage will become more severe than expected. It is because mono-Si wafer makers are running at full capacity and bringing online new production lines on a scheduled basis. Therefore, demand for polysilicon for mono-Si wafers is growing every month, which has led to a prominent undersupply between July and August and prompted polysilicon prices for mono-Si wafers to surge.

While some producers are still in the midst of executing contracts, polysilicon prices keep going up—on the strength of downstream customers’ concern about running short of polysilicon—and prices are now wildly varied in the market. As a result, polysilicon prices for mono-Si wafers climbed this week to RMB 75–80/kg and an average of RMB 78/kg—an increase of 30%, or RMB 18/kg, from the previous week. The shortage of polysilicon for mono-Si wafers looks set to persist until the end of this year; polysilicon prices for mono-Si wafers will thus continue to rise. The persistent shortage and continued price increase may not ease until Q4.

Polysilicon prices for multi-Si wafers have been on the increase every week since the start of July. The shortage of polysilicon for multi-Si wafers has been aggravated by reduced production. This week, the market price for polysilicon for multi-Si wafers jumped to RMB 50–58/kg and an average of RMB 52/kg.

Overseas polysilicon prices increased to USD 8.2–8.7/kg for mono-Si wafers and USD 5.4–5.9/kg for multi-Si wafers, due to the ongoing polysilicon shortage and sustained increases in polysilicon prices in China.
 

Wafer

The diminished supply of mono-grade polysilicon and price increases of polysilicon for mono-Si wafers lead to mono-Si wafer manufactures increasing production costs. Thus, Tier-1 maker Longi has raised its prices by RMB 0.1/piece for G1 and RMB 0.11/piece for M6 while eliminating discounts. Mono-Si wafer prices have climbed by RMB 0.2–0.25/piece compared to July. Meanwhile, producers dedicated to making mono-Si wafers—which hold modest production capacity, have weaker bargaining power when it comes to polysilicon procurement, and are going to have low polysilicon stocks in the second half of this year—offer higher prices than Longi. But with plenty of orders to fill for August, cell inventory draw has not weakened by the price increases.

This week, mono-Si wafer prices were RMB 2.6–2.7/piece for G1 and RMB 2.7–2.8/piece for M6 in China and USD 0.327–0.339/piece for G1 and USD 0.339–0.351/piece for M6 in overseas markets. The price gap between G1 and M6 has widened to RMB 0.1/piece in China, an increase of RMB 0.01/piece from the previous week.

Multi-Si wafer prices did not achieve much increase, as multi-Si cell prices have failed to pick up and even trended downward in the previous week and polysilicon shortage has caused prices to rise. However, as the shortage of polysilicon for multi-Si wafers continued escalates and multi-Si cell prices are improving, multi-Si wafer prices rose across the board this week to RMB 1.3–1.4/piece in the market and RMB 1.35/piece on average. Overseas multi-Si wafer prices trended upward this week to USD 0.17–0.182/piece and USD 0.176/piece on average, driven by increases in their Chinese equivalents.
 

Cell

Tongwei raised prices in the evening on July 24 as cell costs rose following explosions at polysilicon plants and price increases in silver paste. Another reason why Tongwei raised its prices is that producers take advantage of cell shortage in Q3 to bargain for higher prices. With the bargains between cell and module makers still under way, prices for large orders have yet been determined, although some urgent orders have gained price increases and are clinched at RMB 0.88–0.89/W. Against this backdrop, mono-Si cell prices picked up across the board this week, reaching RMB 0.86–0.87/W for G1 and RMB 0.87–0.88 for M6.

The prices came in at RMB 0.89–0.91/W at the high-priced end and RMB 0.83–0.84/W at the low-priced one. Considering that cell prices may trend upward, some module makers mull reducing their dependence on outsourcing providers and instead using their own cell production lines. This shift will tone down the increase in cell prices.

The price for M2 cells became wildly varied this week, with quotes having increased to RMB 0.86/W. However, because demand for M2 cells is expected to shrink from August onward, their price is not likely to rise and will instead go down.

Multi-Si cell prices may climb as wafer price continue to rise due to polysilicon shortage and Indian demand is recovering. Yet, with multi demand declining, the prices will not increase much.
 

Module

As prices for polysilicon and wafers are both on the rise and cell prices are increasing further than expected, prices for PV glass, ribbons, and EVA are all climbing with the ever-growing demand predicted in the second half of the year. And since module makers offered markedly low quotes in the first half of the year to secure orders, modules will bare generate any profits in Q4. Modules sold at under RMB 1.4/W do not make a profit, which is particularly an issue for producers without cell production lines. So, module makers that used to struggle to raise prices are asking for higher prices.

However, for module makers, renegotiating prices may undermine their shipments for the year and even their long-term customer relationships. So, it is unusual to reset the prices for module orders. Conversely, newly clinched deals enjoy an increase of RMB 0.05–0.1/W or USD 0.01/W. While module prices in China have started to rise, those in overseas markets show little sign of increase. Indeed, there is an ongoing rush to bring online auctioned PV projects in China, but the projects can be postponed for grid connection in many other countries because of the COVID-19 pandemic and trading prices in some mature markets are somewhat higher than market average.

Price increases across the supply chain exert considerable financial pressure on the module sector—all the reason why module makers have reduced their utilization rates. In addition, increased module prices will have an impact on how much grid-parity PV will be installed in China this year. Given both factors, there should be intense bargains across the supply chain between August and September.