Lingering glass shortage pushes up module costs

Polysilicon prices

As polysilicon supply continues to grow, mono-Si wafer producers, with sufficient stock and an anticipation of further price decreases, are biding their time rather than purchase polysilicon now to prevent profit losses induced by stocked inventory.

Since the end of China’s National Day, bargaining over polysilicon prices has been under way, although some polysilicon makers with bulging stocks concede during the negotiation, giving wafer producers more bargaining power than before.

With downward price pressure from the downstream segments, Tier-1 wafer makers procuring less polysilicon, and Longi due to announce its wafer prices for November, polysilicon prices have become wildly variable in the market, with the gap in the trading price for mono-grade polysilicon widening further than before. This week, polysilicon prices declined marginally to RMB 89/kg for the low-priced end, staying at RMB 89–92/kg, and averaging RMB 90/kg. Overall, prices for mono-grade polysilicon will be trending downward throughout Q4, with trading prices depending on negotiations between polysilicon and wafer producers.

With multi demand shrinking and Chinese multi-Si wafer prices slipping, prices for multi-grade polysilicon were still being negotiated this week. Only a handful of deals were struck, with the trading price declining fractionally to RMB 59–63/kg and RMB 61/kg on average. 

Despite impacts of decreases in Chinese polysilicon prices, polysilicon prices in non-Chinese markets remained stable. Price negotiations continued into this week, with few deals clinched. Prices were USD 10.2–10.7/kg for mono-grade polysilicon and USD 7.2–7.7/kg for multi-grade polysilicon. On the whole, as wafer producers expect polysilicon prices to decline and Chinese polysilicon prices have dropped marginally, the trading price for polysilicon in non-Chinese markets is expected to trend downwardly before the end of October. 
 

Wafer prices

Mono-Si wafer prices stayed at high levels for G1 and M6 this week—with the trading price having remained almost consistent with its previous levels at RMB 3.03–3.08/piece for G1 and RMB 3.18–3.23/piece for M6 in China and USD 0.395–0.4/piece for G1 and USD 0.414–0.419/piece for M6 in foreign markets. Meanwhile, Longi is going to announce its prices for November.

Despite a slight decrease in prices for mono-grade polysilicon after the National Day, mono-Si wafer prices seem more likely to remain stable, because an expected installation boom in Q4 and annual maintenance that is going on among several manufacturers have led to a supply/demand equilibrium for mono-Si wafers. 

As shrinking multi demand is driving down multi-Si cell prices. multi-Si wafer prices can no longer hold up. Having stayed at high levels for two months, multi-Si wafer prices have begun to fall. The trading price for multi-Si wafers declined this week to RMB 1.55–1.62/piece, averaging RMB 1.59/piece. In non-Chinese markets, the trading price for multi-Si wafers sat at USD 0.203–0.215/piece this week, averaging USD 0.209/piece, with a few deals clinched. Facing gloomy market prospects, multi-Si wafer makers may have to reduce their utilization rates.
 

Cell prices

This week, mono-Si cell makers executed previous contracts and struck few deals, with prices having remained consistent with their previous levels. Mono-Si cell prices in non-Chinese markets changed slightly due to marked variations in the USD/RMB exchange rate.
M6 cells, which are running short, see their prices remain high at RMB 0.93–0.94/W. However, with healthy demand in Q4, there is a pickup in the number of high-priced small orders clinched at RMB 0.95/W.

Inventory draw for G1 cells has weakened because the ongoing shortage of PV glass and the shift in market demand to M6 have prompted G1 cell production lines to switch to M6. However, with wafer supply declining, the price for G1 wafers remained high this week at RMB 0.85–0.86/W. On the whole, mono-Si cell prices will sustain less decrease throughout November. 

Multi-Si cell prices hovered at RMB 2.6/piece this week. However, the prices cannot decline further, and how they will evolve depends on how multi-Si wafer prices will change. Some manufacturers are going to shut down their production lines by the end of this year, as multi demand is shrinking and multi-Si cells generate modest profits.
 

Module prices

Glass orders for October were confirmed earlier in the month. Meanwhile, although 3.2-mm coated glass is recently quoted at RMB 41–45/m2, such glass is difficult to procure and is running seriously short. The shortage of PV glass has slowed down module makers’ delivery schedules; some of them have reduced their utilization rates marginally.

While the price for PV glass surged in October, module prices—which underwent a flurry of hikes during July–September following the explosions at polysilicon labs—has recently remained stable because with the prices already settled for many of the previous orders, buyers can no longer accept any further price increases. However, the price hikes do manifest themselves in small orders for available modules and in urgent orders.

Looking ahead, next week will see a new round of price negotiations over PV glass. But since the glass is running short, its price may again increase next month, driving up module costs. Even so, module prices may not pick up because orders have been settled with a price of RMB 1.59–1.6/W. Module prices are variable in the spot market, where small and urgent orders have increased to over RMB 1.7/W.