Upstream prices advance unaligned with downstream price trend

Polysilicon

Polysilicon prices continue rallying. Prices of mono-grade polysilicon return to RMB 64-71/kg. Polysilicon of lower quality, such as popcorn polysilicon and multi-grade polysilicon, also experience a slight rebound.

There are two main reasons for this. First, the growth of actual production volume fell short of expectations. Manufacturers delay commissioning and bringing new capacities online, slowing down increases in supply and actual production volume in the third quarter.  Second, demand for polysilicon increases as the ingot segment keeps commissioning furnaces of their new capacities in the third quarter. The supply-demand condition allows efficient inventory depletion, results in tight supply on the spot market, and triggers the price upturn.

In the third quarter, as module makers increase production plans, the polysilicon sector will see prices advance and profit recover further. The industry’s focus will shift to profit distribution and the contest for the bargaining power between the polysilicon and wafer sectors.
 

Wafer

Leading manufacturers updated pricings at the end of July, raising prices for M10 wafers to RMB 2.93-2.95/piece. Other manufacturers followed suit. This week, trading prices increase, coming in at RMB 2.95/piece for M10 p-type wafers, and RMB 3.92/piece for G12 ones, 4-6% higher than prices of last week. N-type wafers are also traded higher, with prices rising to RMB 3.05/piece.

Presently, power rationing due to the Summer World University Games in Chengdu is impacting the actual output. Meantime, the diversity of wafer formats affects purchasing and selling efficiency.

Both n-type and p-type wafers experience supply-demand mismatches. Some manufacturers dedicate a larger portion of capacity to n-type production but face challenges in quality control. Leading manufacturers post unhurried progress in transitioning to n-type production, yielding more moderate output. Meanwhile, demand for p-type wafers remains strong as n-type cell production capacity comes online slowly. Against these backdrops, shortages in both n-type and p-type wafers send prices rising this week, then stabilizing afterward.

In the short term, wafer supply will still be rather tight. Given that, and underpinned by polysilicon price hikes and the huge profit of the cell sector, wafer prices will stabilize next week.
 

Cell

M10 cells are traded slightly higher this week, mostly at RMB 0.74/W, with manufacturers offering price quotes aggressively at RMB 0.75-0.76/W. For G12 cells, prices remain at RMB 0.73/W.

For n-type cells, prices stabilize, sitting at RMB 0.8/W this week for TOPCon M10 cells, and RMB 0.9/W for G12 HJT cells, of which suppliers are fewer. N-type cell prices remain RMB 0.06/W higher than p-type ones.

There is a clear disparity between price trends of M10 PERC cells and modules. Since prices of cells are relatively low, module manufacturers purchase cells proactively, striving to ship the most in the second half of the year.

Despite having a bigger say in negotiations, cell manufacturers must value their relationships with their clients. As manufacturers release TOPCon cell capacity at a large scale, pushing up production volume, the cell sector will see severe oversupply and price wars in the first half of next year. By then, manufacturers will not only need strategic decisions but also support from the clients.
 

Module

Upstream price hikes continue, whilst prices for some BOMs set to increase, pressuring the module sector. Negotiations extend, as project developers buy no more than needed while module makers cannot offer lower prices amid rising costs. For PERC glass-backsheet modules, Tier-1 module makers take orders at lower prices of RMB 1.25-1.28/W to secure orders, while their Tier-2 and Tier-3 peers at RMB 1.22-1.25/W. Distribution prices are still mixed, with more module makers delivering at prices slightly beyond RMB 1.2/W. Some module makers deliver previous orders in the high-price range of RMB 1.35-1.4/W.

Module makers, mostly Tier-1, increase production plans in August. Tier-2 and Tier-3 are cautious, with some even trimming down production plans. Overall, module production nearly reaches 50 GW this month. Given relatively high inventory levels in some regions, demand will not pick up until the latter part of this month. Further price drops are likely in the long run as module makers vie for orders. Chances for price hikes in the near term are little. This week, prices only rebound for cheap modules, of which order volume is low.

In non-China markets, prices slip marginally this week. Chinese exporters deliver products at USD 0.165-0.18/W (FOB). In Asia-Pacific, module makers delivered at USD 0.165-0.17/W. In Europe, spot prices come in at EUR 0.16-0.17/W. Modules with black backsheet possess a premium of EUR 0.02-0.025/W. More modules are traded in the low-price range of EUR 0.15-0.16/W as some manufacturers keep selling off inventory. Once in a blue moon, prices in Europe are lower than in the Asia-Pacific market.  

For locally manufactured modules, prices stabilize for the time being. In the U.S., exports of some mid and small-scale module makers face challenges, signaling higher trade risks in the future and lower module prices in the fourth quarter. Meanwhile, Tier-1 module makers export products more steadily. In India, prices for locally produced modules fall slightly to USD 0.24-0.3/W due to sluggish domestic demand. Prices for imported Chinese modules are USD 0.16-0.178/W, and USD 0.21-0.27/W for Southeast Asian ones. Module exports from India to the U.S. are affected. Future development requires further observation.  

Prices for n-type modules experience small fluctuations. Module makers still deliver G12 HJT modules at RMB 1.5-1.6/W in China and USD 0.197-0.22/W in non-China markets.

For M10 TOPCon modules, prices lose ground, coming in at RMB 1.28-1.45/W this week. In non-China markets, prices sustain at USD 0.18-0.21/W, with a premium of USD 0.01-0.015/W against prices for PERC modules.