The explosion at the Wacker chemical plant in Tennessee of the U.S. last week has aggravated the strained polysilicon supply, making the expected price cut by the industrial chain uncertain.
In September, downstream PV-cell module suppliers began to face pressure for price cut, which, plus inventory buildup for polysilicon products following the end of U.S. Section 201-induced demand, prompted price-cut plan spanning entire supply chain. That plan, however, has been clouded by frequent outburst of accidents at upstream polysilicon sector, prolonging strained supply and keeping prices high. Midstream suppliers of PV cells and wafers have the most awkward situation, as their profits have been squeezed by pressure from both the upstream and downstream sectors.
There are a number of noteworthy events next week, including preliminary ruling on Section 201 case, appearance of take-delivery demand before the Oct. 1 long holiday in China, and new trend of the polysilicon market.
Despite emergent shutdown of Wacker plant's operation following the explosion, most factories have stocked up with materials for September, which, plus China's trade barrier for polysilicon from the U.S., has contained the influence for the time being, before its possible spread one week from now.
As Wacker is a major supplier for Taiwanese wafer manufacturers, Taiwan's polysilicon prices, now at US$17-17.6/kg, are expected to climb starting this or next week, on panic procurement triggered by fear of disrupted supply.
In China, polysilicon prices have stayed at the high level of RMB 147-149/kg this week, with prices of some imported materials topping US$19/kg. With Wacker not a major supplier for Chinese factories, some are willing to import polysilicon from the U.S., despite anti-dumping tariff, due to high polysilicon prices and shortage of supply. Switch of procurement will tighten polysilicon supply for other brands, inducing China's polysilicon price hike.
With downstream demand on the wane, quite a few polysilicon suppliers are willing to sacrifice some of their large profits and cut prices slightly, for the sake of good customer relationship. In the short term, polysilicon prices will diverge on different customer demands, which, though, won't last long before dissemination of message. Next week will be a critical period for determining market direction.
With market demand waning, tight multi-si wafer supply plaguing the market from June through August has been alleviated. With Section 201-induced demands ending in late August, visibility of multi-si wafer orders has been shortened to 0.5-1 months, down from 1.5-2 months in June and July, along with price drop. With polysilicon prices remaining high, first-tier suppliers will only cut prices slightly, in response to downstream pressure, before rendition of preliminary Section 201 ruling and clarification of market trend next week.
Ultra high-performance multi-si wafer prices have dropped slightly to RMB 5.05-5.15/pc this week. Due to cost pressure, downstream demand for diamond wire-sliced multi-si wafers has surged recent two weeks, overstraining supply. Compared with traditional mortar shaping, diamond wire-sliced wafers offer higher margin and are more appealing to customers, prompting expansion.
Due to continuing constraint on supply by leading suppliers on power rationing. mono-si wafers are simmering for price hike, which, though, has been dampened by multi-si wafer prices, now in the phase of cyclic price decline. Mono-si wafer prices have stayed in the range of RMB 6-6.2/pc or US$0.8-0.84/pc this week, up 0.2% on average.
Due to upturn in downstream demand and slackened upstream prices, PV cell prices have been steadier this week. With demand from Southeast Asia and overall polysilicon demand weakening, prices of Taiwan-made PV cells have begun to tumble, narrowing the gap with prices of mainland Chinese products. Given lowering of MIP (minimum import price) for Chinese products by the European Union and end of Section 201-induced demand, advantage of Taiwanese suppliers in the regional market has been reduced. Prices of Taiwan-made PV cells have dipped to US$0.236/W this week, when prices of China-made PV cells have stabled at RMB 1.73-1.75/W. Under price-cut pressure, supply and demand for diamond wire-sliced PV cells have risen.
The module market has remained relatively stable this week. Bolstered by demand related to support for impoverished regions and decentralized policy, China's terminal market features "unfathomable demand," which, plus monopoly of overseas demands by first-tier suppliers, has led to divergent and unstable demands for module suppliers. Recent price hike for supplementary materials has yet to affect module prices. With PV-cell prices remaining stable and popularity of diamond wire-sliced PV cells spreading, it is rather unlikely for module suppliers to pass higher cost for supplementary materials to their prices.