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China’s PV market remains uncertain as the installation rush in the country comes to the end and the government has not released any detailed plans on domestic PV targets and related subsidies. Therefore, PV manufacturers in China and Taiwan will see sharp drops in incoming orders in late June. Going into the third quarter, there will be no policy pressure to generate installation rushes in major markets such as China, the U.S. and Europe, noted Corrin Lin, assistant research manager of EnergyTrend, a division of TrendForce. Power plant companies also expect further decline in module prices, so their demand during this period will be fairly cool. With the off season approaching in the third quarter, manufacturers that have expanded their capacities earlier this year will be under a lot of pressure to cut prices.
Seasonality and oversupply will accelerate price decline across the supply chain
The shortage of polysilicon persists in China as most mono-Si and multi-Si wafer suppliers are maintaining full capacity in June. Though the rapid decline of multi-Si wafer prices are already causing some fluctuations in polysilicon prices, the average spot price in the Chinese market during this month will remain somewhere in the level of RMB 145 per kilogram. Midstream and downstream manufacturers have also revised their capacity utilization in anticipation of weakening demand in July. Hence, polysilicon prices will be on a downtrend in the near future.
Mono-Si wafer suppliers have been very active in expanding both their capacities and market shares this year. In response to this growing threat, multi-Si wafer suppliers led by major manufacturer GCL-Poly have started to lower their prices in June. On the whole, the price difference between mono-Si and multi-Si wafers have again widened to near US$0.1 per piece, and the average domestic price of Chinese multi-Si wafers has dropped to RMB 6~6.2 per piece. In the Taiwanese wafer market, the average multi-Si wafer price has fallen from US$0.85~0.855 per piece in May to about US$0.835 per piece in June. The competition between mono-Si and multi-Si products is expected to continue to capture the attention in the market. EnergyTrend expects prices of multi-Si wafers to slide again in the month’s latter half as the downtrend in the overall demand becomes more significant.
Weak demand, falling multi-Si wafer prices and other factors are putting pressure on the PV cell market, even though there is not much room for further price decline. In the Taiwanese cell market, the average ex-factory price has fallen to US$0.293~0.296 per watt. Profit margins of both Taiwanese and Chinese cell makers are now nearing zero. This year, the worldwide cell capacity is projected to expand by 13~15 gigawatts, but the total demand will grow by just 4 gigawatts. For cell companies, the slowing demand will cause substantial challenges for them during this and next year’s off seasons.
First-tier Chinese PV manufacturers such as Jinko Solar, JA Solar and Trina Solar have almost completed setting up their overseas production bases and are scaling back the cell purchases from manufacturing facilities outside China and Taiwan. Hence, cell prices in markets outside China and Taiwan have dropped below US$0.37 per watt.
The third-quarter outlook of the PV module market is negative. The expansion of the worldwide module capacity has been greater than that of the cell capacity. Furthermore, the number of grid-connected power plant projects in China is anticipated to lower significantly in the second half of the year. Foreign module companies are experiencing slowing demand as well. According to Lin, the average module prices in different regions will be on a downtrend to the end of this year because of rising inventories.