Wafer prices set to rise while module prices keep falling

Polysilicon

Polysilicon prices continue rallying mildly. Prices of mono-grade polysilicon rebound to RMB 70-72/kg. Manufacturers, big and small, sign orders at higher prices. Prices for popcorn polysilicon and multi-grade polysilicon also rise, but not as forceful as those of mono-grade and recycled polysilicon scraps. Prices for higher-quality polysilicon, used in n-type ingot segment, bounce back more significantly to RBM 75-81/kg.

In August, the polysilicon sector commissions little new capacity. Some leading manufacturers bring commissioned capacities online more slowly than scheduled. Though actual supply appears to be the same, overall production expansion is almost negligible. The torpidity may not improve in the third quarter. Due to rising polysilicon demand induced by the soaring ingot capacity, a temporary polysilicon shortage reappears. The supply of high-quality polysilicon from leading manufacturers is especially tight. In the third quarter, as module makers increase production plans, the polysilicon sector will see prices advance and profits 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

Wafer prices remain the same as last week, sitting at RMB 2.95/piece and RMB 3.92/piece for p-type M10 and G12 wafers, respectively. For now, trading prices per watt of the two are the same. For n-type M10 wafers, trading prices come in at RMB 3.05/piece for those with a thickness of 130μm.  

However, wafer manufacturers are poised to up prices on Wednesday. Zhonghuan updated official pricings at night, raising prices by 6-7% to RMB 3.15/piece for M10 and RMB 4.2/piece for G12 ones.

Besides the diversity of wafer formats and the shift from p-type to n-type production, power rationing in Leshan, Sichuan and Baotou, Inner Mongolia in recent months upsets output. Although power rationing in these regions takes place alternatingly, thus having less impact, there are still tens of millions to hundreds of millions of output affected during June and August.

Presently, relatively tight wafer supply, polysilicon price hikes, and handsome profits of the cell sector underpin wafer prices. Wafer manufacturers offer higher price quotes, but whether they can repair profit margins during this short window period hinges on the acceptance from cell manufacturers.
 

Cell

Currently, the cell sector has more room for profit. Cell prices continue rising this week, coming in at RMB 0.75/W for M10 cells, which are close to the price quotes manufacturers proposed at the beginning of the month. For G12 cells, prices remain at RMB 0.73/W. Prices for n-type cells stabilize at RMB 0.8-0.81/W, RMB 0.05-0.06/W higher than prices for PERC cells.

The persisting disparity between cell and module price trends is largely attributed to the proactive purchase of module makers. The vigorous cell demand stems from module makers’ efforts to ship the most in the second half of the year, deplete stocked modules with higher production costs, and seize profit opportunities by delivering orders previously signed.

However, the current price level of RMB 0.75/W leaves module makers little room for profit. Module makers, even Tier-1 ones, purportedly plan to cut production this week. Doubled with rising prices for glass and other BOMs, cell prices seem to have reached the relative peak and will not advance further next week.
 

Module

Module price hikes are subject to demand, as project developers buy no more than needed. Module makers re-strategize.To secure orders, Tier-1 module makers accept lower forward prices, which now reach RMB 1.25-1.28/W for PERC glass-backsheet modules. Prices of Tier-2 and Tier-3 module makers become lower than production cost, sitting at RMB 1.23-1.26/W, with the low-price range rebounding by RMB 0.01-0.02/W. Distribution prices are still mixed. Some module makers deliver at RMB 1.18/W, while some deliver previous orders in the high-price range of RMB 1.35-1.4/W.

Under cost pressure, a growing cohort of module makers consider curtailing production this week. Module makers plan to purchase fewer cells, in an attempt to shift cost pressure to the cell sector. Meantime, some Tier-2 and Tier-3 module makers continue trimming down production plans. 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. Average prices will linger at RMB 1.25-1.28/W.

In non-China markets, prices slip marginally to USD 0.17/W this week. Chinese exporters deliver products at USD 0.16-0.18/W (FOB). In Asia-Pacific, module makers delivered at USD 0.165-0.17/W. In Europe, spot prices come in at EUR 0.15-0.17/W Europe, with modules with black backsheet possessing a premium of EUR 0.02-0.025/W. More modules 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 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 1.28-1.4/W this week. In non-China markets, prices sit at USD 0.175-0.21/W. The premium against PERC ones shrinks to RMB 0.08/W in China and sustains at USD 0.01-0.012/W overseas.