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Trade-off between Profitability and Inventory Clearance Becomes the Biggest Challenge for Solar Cell Manufacturers
July 27, 2011 — According to the latest survey conducted by EnergyTrend, manufacturers indicated that they are conservative about September orders and the PV market of 3Q11. On the other hand, the spot price of polysilicon remained at a high level. The Chinese market demand still stayed high while other markets showed signs of slowing. According to EnergyTrend, downstream manufacturers are conservative about spot price trend of polysilicon, primarily because most orders from large manufacturers are signed on contractual terms, and few make purchase on the spot market. The second tier and third tier manufacturers are the main active participants on the polysilicon spot market, but their combined purchase volume is much less than top tier manufacturers’. Therefore, it is estimated that the current spot market situation can not support polysilicon manufacturers to raise the price.
Source: EnergyTrend
This week’s survey shows that the polysilicon price remained stable with the main trading price between $52/kg and $54/kg. Notably, the trading price in the Chinese market is slightly higher than other areas, ranging from $55/kg to $58/kg with the average price of polysilicon remaining at $54.55/kg. In terms of Si wafer price, the average market spot price of mono-Si wafer stayed stable, and the main trading price stayed between $2.6/piece and $2.65/piece. The current trading price of multi-Si wafer remanded between $1.95/piece and $2.1/piece, but the top tier manufacturers’ price has increased to $2.0/piece. Comparatively speaking, the average price of multi-Si wafer has slightly risen by 0.05% to $2.051/piece while that of mono-Si waver has increased by 0.04% to $2.632/piece.
As for solar cells and modules, due to strong demand for high conversion efficiency solar cells, the price remained relatively high with the highest price above $0.9/Watt. In addition, from perspectives of the production line, the output volume of solar cell with conversion efficiency under 16.4% accounts for 10%~20%. Although the demand for high conversion efficiency solar cells stays strong, manufacturers still need to take selling lower conversion efficiency product into consideration. Therefore, with the pressure of trading price adjustment for lower efficiency products still remaining, trade-off between profitability and inventory clearance is the biggest challenge for solar cell manufacturers. According to EnergyTrend, cell prices fluctuated this week and lower priced products has dragged down the average price by 0.62% to $0.797/Watt. On the other hand, the average price of module, affected by Chinese manufacturers’ price quotation, has continuously decreased by 0.78% to $1.265/Watt.
According to current market situation, manufacturers indicated that they put much focus on the Chinese local governments’ subsidies. To date, Jiangsu, Shandong, and Qinghai provinces have announced their local subsidies. Among those, the subsidy of Qinghai government attracted wide attention of Chinese PV manufacturers. However, EnergyTrend believes that fund availability is the key determinant factor for the subsidy program’s future success. Furthermore, subsidy releases show the Chinese local governments’ support for local PV industry developments. In particular, Jiangsu and Shandong, their PV industry developments have reached a certain scale. EnergyTrend indicates that the subsidy release can help locally based manufacturers to overcome challenge of the oversupply market.
Notably, the Qinghai government attempts to support its PV industry growth through the new subsidy in the hope of making Qinghai province become a big PV production base and market place. Currently, the Qinghai government has achieved the fundamental goal. However, the Chinese market is now the world’s biggest PV production base. At this stage, the accumulated production capacity in the southeast China can fully already meet the projected annual domestic market demand through 2020. Additionally, the northwestern China has also released new subsidy policy that might further spur the production output. Therefore, EnergyTrend believes that the risk of Chinese PV industry forming a bubble may increase, if the oversupply situation continues or even worsens without guidelines.
