PV demand frozen after China’s installation rush ended on June 30. In the third quarter of 2016, order visibility is expected to be very low and inventory of wafer, PV cells and modules will rise. PV module manufacturers encountered sale restrictions so they slashed budget for purchasing PV cells, driving another wave of PV cells’ spot price decline.
PV cells’ quotes at the lowest level in history, below cash costs
Fire incident occurred in REC Silicon’s silane facility in Moses Lake, USA was estimated to cause a slight supply reduction of granular polysilicon in 3Q, while it will not cause severe impact to the sluggish market. In contrast, polysilicon quotes in many markets fell because wafer vendors were not in any rush to purchase extra materials for the frozen demand.
Rapid price decrease in PV cell sector reversely drove price drop in wafer sector. As for multi-si wafers, the spot price has fallen to a level below US$0.78 per piece, and could further decline to US$0.76 and RMB5.7 per piece in late-July and August. Yet the price decline for wafers was more moderate than PV cells.
Price drop for mono-si wafers was not as significant as for multi-si wafers because the market’s demand to mono-si wafers was relatively stronger. As a result, the concessional price offered by the Chinese mono-si leading company cannot offset the enlarging price gap between mono-si and multi-si wafers. Mono-si suppliers need to cut their spot price more significantly or they will be unable to keep a competitive price for expanding market share. Therefore, EnergyTrend expects a rapid price decrease for mono-si wafers in next month.
PV cells’ spot price again fell during this week because of rapidly weakening demand. Some orders for multi-si cells were dealt at price below US$0.27 per watt, which was lower than cash cost and reached the lowest level in the history of PV supply chain. Consequently, the more cells a cell manufacturer produce, the huger the loss will be. Many Taiwanese cell manufacturers and some Chinese second- and third-tier manufacturers have plans to, or already lowered their utilization rates although this decision will increase the manufacturing costs per watt.
The downward price trend and negative outlook to the market demand will lead to a lower utilization rate in August than in July, forecasted EnergyTrend. The weakening demand will continue restricting new orders in near future and officially finish supply shortage in the mono-si cell sector. Hence, mono-si cell manufacturers have to cut their price to win new orders. As the margin was high in the mono-si cell sector in previous months, the price decline in this week was also more rapid than multi-si cells.
On the other hand, it says that Hemlock suing SolarWorld for agreement violation will be possible put uncertain factor to USA’s rulings on China PV imports (a.k.a. USA’s anti-dumping and countervailing duties on Chinese solar panels and cells). However, EnergyTrend believes that the trade relationship between China and USA will not be transformed suddenly because a potential business earthquake in only one company. Furthermore, if China allowed polysilicon manufactured in U.S. and Europe to import, the stable polysilicon supply-and-demand balance in China would be negatively impacted. It is possible for China and USA to restart negotiations due to Hemlock’s accusation against SolarWorld, while EnergyTrend doesn't regard it as a strongly influential event to the trade situation until, at least, June 2017. Therefore, the spot price of PV cells manufactured in third-party countries will be set depending on real supply and demand.
Spot price of PV cells produced in third-party countries has been decreasing and is possible to drop below US$0.34 per watt. The gradually completed cell capacity deployed by Chinese first-tier cell manufacturers such as JinkoSolar, JA Solar and Trina solar accounted for the price downturn. Motech’s heavy stress to cut U.S.-bounded cells’ price, due to the weak demand, accounted as well.
As the capacity of grid-connection in 2H16 in China is expected to be significantly lower than in 1H, it is difficult to forecast a market warm-up in following few weeks. Both mono- and multi-si PV modules’ prices rapidly declined during this week. It was highly acceptabil for multi-si module makers to receive orders at price of level below RMB3.5 and US$0.45 per watt. As the global module inventory kept rising, the price trend is very likely to go downwards until the end of 2016. Especially in the U.S. market where is usually recognized to be more profitable, EnergyTrend projects a 10% price fall rate from June to the fourth quarter of 2016.