Downstream prices lose ground upon faster upstream price declines

Polysilicon

The supply-demand dynamics keep shifting in the upstream, with a growing oversupply in the second quarter. Polysilicon inventory piles up persistently in the spot market, posing challenges for manufacturers to reduce it. Although inventory levels vary among manufacturers, the overall volume remains stubbornly high.

Price range of polysilicon widens further this week, with Tier-1's mono-grade polysilicon prices dropping to RMB 132-146/kg and exhibiting greater disparities. Prices for mono-grade polysilicon of Tier-2 and Tier-3 manufacturers experience a sharper decline, coming in mostly at RMB 120-132/kg. Price quotes of Tier-2 and Tier-3 manufacturers are even more staggering, taking into account products that are mixed with different ratios of low-quality polysilicon.

The gap between prices of Tier-1 and Tier-2 manufacturers continues to expand every week. As the polysilicon sector still maintains higher gross profit than downstream sectors, Tier-2 manufacturers will encounter heightened competition in quality improvement, progress of new production capacity, and cost control to ensure delivery and inventory usage.
 

Wafer

Wafer supply is gradually surpassing demand as manufacturers keep ramping up production. The rapid accumulation of total wafer stocks puts manufacturers under sales pressure, resulting in a significant drop in wafer prices this week.

For now, prices for M10 and G12 wafers come in at RMB 4.6/piece and RMB 6.1/piece, respectively, a decrease of 16-17% from last week. The price range is also expanding as Tier-1 manufacturers maintain favorable prices, while their Tier-2 and Tier-3 give in, with some _ prices as low as RMB 4.2/piece for M10 and RMB 6/piece for G12. The price trend underlines the ongoing price war and manufacturers’ adaptive strategies in response to an excess supply.

Wafer inventory keeps accumulating, potentially reaching 15-17 GW at the end of the month, if manufacturers maintain high utilization rates. Despite recent significant price declines and a bullish outlook for demand in the middle of the year, some manufacturers talk about cutting production due to difficulty in inventory depletion. Impacts of adjustments in the planned production of wafers will not be felt immediately. Actual production output will only exhibit notable decreases in June at its earliest. In the future, utilization rates will play a crucial role in determining the price trend. If manufacturers reduce production excessively, prices may rebound and plateau again. 
 

Cell

Cell prices drop in line with unceasing wafer price declines. Still, cell manufacturers sustain high utilization rates, except some undergo inspections due to power outages. 

Cell prices see an evident downturn this week, sitting at RMB 0.95/W and RMB 1.05-1.06/W for M10 and G12 formats, respectively, decreasing 4-8%. In overseas markets, the decline in prices in dollar terms is milder as buyers adopt the locked-in exchange rate.

For TOPCon (M10) cells, prices drop in line with wafer prices, coming in at RMB 1.05-1.06/W. Even with the declines, n-type cells sustain stable premiums against p-type ones. Despite lower trading volume, HJT (G12) cells see prices decreasing with that of M10 cells, sitting at RMB 1.25/W.

Wafer price declines have yet to ripple to the cell sector, thanks to the strong demand. With wafer prices falling, cell prices may drop next week. Actual price range depends on negotiation outcomes.
 

Module

End users to stick to a wait-and-see stance due to upstream price declines this week, suspending deliveries for some centralized generation projects. For distributed generation projects, price range widens to RMB 1.6-1.68/W. As a result, several projects scheduled for construction in the second quarter are delayed, and the rate of module consumption falls short of expectations.

Module prices stay on a gradual downward trend this week as manufacturers cut prices. Glass-backsheet modules are delivered at RMB 1.6-1.75/W, mostly RMB 1.65-1.66/W. For glass-glass modules, prices mostly sit at RMB 1.68-1.69/W. The gap between prices of Tier-1 and that of the rest module makers remains distinct, as the latter is closer to the low-price range, purportedly reaching RMB 1.6/W.  Considering production costs, some manufacturers begin to adjust pricing strategies. Hopefully, there will be a steady price decline during the remainder of the second quarter.

In overseas markets, module prices stabilize for the time being. Module makers deliver orders at USD 0.2-0.22/W (FOB). In Europe, module prices sit at USD 0.21-0.215/W in April. In some channels, inventory piles up, with prices coming in at USD 0.225-0.24/W. Prices for Chinese modules remain 10-20% cheaper than those of non-China brands. 

In the U.S., prices stabilize at USD 0.4-0.45/W (DDP) for modules imported from Southeast Asia, and USD 0.55-0.6/W (DDP) for U.S.-made ones. In Latin America, prices slip to USD 0.21-0.215/W. 

In Australia, the Middle East and Africa, and Brazil, prices come in at USD 0.21-0.25/W, USD 0.20-0.22/W, and USD 0.19-0.225/W, respectively. In India, average module prices slip to USD 0.295/W for locally made modules, while delivering prices stay at USD 0.29-0.33/W. For modules imported from China and Southeast Asia, prices each come in at USD 0.215-0.22/W and USD 0.26-27/W (before tax).

As a result of lower supply chain prices and PERC module prices, G12 HJT modules are delivered at markedly reduced prices of RMB 1.83-1.87/W, RMB 0.1/W higher than that of TOPCon. This aligns with the price decline of wafers and cells, as predicted last week. Prices in overseas markets sustain at USD 0.25-0.26/W.

For M10 TOPCon modules, module makers slow down deliveries due to market volatility in China. Prices slip to RMB 1.7-1.79/W, sitting mostly at RMB 1.73-1.75/W.  In overseas markets, prices drop to USD 0.22-0.24/W upon fluctuations in PERC module prices in dollar terms.