Following the conclusion of SNEC 2016, China’s largest PV industry exhibition, future industry trends have gradually become clearer. With China’s strongly domestic demand in the first half of this year, production has been full. Yet the large amount of grid-connected PV installations during the first two quarters might afterwards sharply cool down China’s domestic demand starting from July. Although India’s demand is expected to remain strong, other markets will go weak and bring a frosty market in the third quarter.
Demand is weakening in the supply chain from downstream to upstream sectors
Polysilicon’s price has increased to RMB 145-148 per kg since the Chinese New Year and squeezed margins for downstream suppliers. As the demand weakens, prices for mid and downstream manufacturers will fall. Therefore, the price of polysilicon has already peaked this year and will be difficult to go skyrocketing again.
Given the fall in PV cell prices in advanced to SNEC 2016, the price of multi-si wafers has decreased on a monthly basis. Since PV cell vendors across the Taiwan Strait are pushing for lower prices, the June quotation has yet to be set. It is possible that the drop in wafer prices could be more substantial than the past two months and fall to below US$0.84 per piece.
There is almost no room for PV cell prices to fall. With demand weakening, downstream clients’ inventory has continued to build up and prices have fallen to US$0.3 per watt. When accounting for the price of wafers, PV cell vendors in both Taiwan and China have razor-thin margins. In addition to the fall in PV cell prices, there has been a continuous flow of news that downstream vendors will cut the volume of their purchases. Beginning from June, some vendors will be unable to maintain a full utilization rate.
During the second half of the year, the quantity of grid-connected installations may be less than during the first half. The third quarter’s installation is consequently not promising. Module vendors generally believe the market will cool from June to August, with prices at around RMB 3.5 per watt、US$0.46 per watt. Also, inventory pileup is continuing, which is causing the prices of overseas modules to fall, too. It is said that some module vendors plan to lower utilization rates. With the exception of no market can drive industry demand except of India, prices in the entire PV supply chain keep falling.
In Taiwan, although the new government shows strong supports for solar energy, supportive policies will need time to come to fruition. It will be difficult for Taiwan’s domestic demand to noticeably grow in the next two years.
