High Inventory Pressure Persists as PV Supply Chain Prices Have Yet to Find a Floor

Polysilicon

The polysilicon segment continues to face the dual pressures of elevated inventories and increasing supply. Industry-wide inventory remains at approximately 520,000 metric tons, with destocking progressing slowly. As leading manufacturers resume and ramp up polysilicon production in July, monthly polysilicon output is expected to approach 110,000 metric tons, further widening the supply surplus relative to downstream demand.

Wafer manufacturers currently hold sufficient polysilicon inventories, resulting in weak procurement appetite. Consequently, price negotiations between upstream and downstream players have kept spot market activity subdued. Although recent speculation surrounding anti-overcapacity measures and energy consumption policies has driven futures prices higher, market demand remain weak. With oversupply still weighing on the market, polysilicon prices continue to face downside risks in the near term, and a meaningful rebound appears unlikely.

Wafers

Wafer inventories remain elevated at more than 28 GW, keeping shipment pressure high. Wafer production schedules are expected to remain largely unchanged in July. Although downstream cell manufacturers have shown modest inventory reduction, overall operating rates remain high, resulting in only gradual destocking.

Amid continued weakness across the supply chain, wafer prices remain under pressure. Tier-2 and tier-3 manufacturers continue to offer price concessions to accelerate cash flow. Current wafer prices are approaching the integrated production costs of leading manufacturers, limiting the scope for further significant price declines. However, without substantial inventory reduction, the supply-demand imbalance is unlikely to improve in the short term, and wafer prices are expected to remain weak and fluctuate at low levels.

Cells

Cell inventories have climbed to approximately 12 days, while shipments remain sluggish and pricing has become increasingly disorderly. The primary driver is persistent oversupply, as integrated manufacturers continue operating at high utilization rates. Meanwhile, falling silver prices have weakened cost support for cell production. Traders have responded by liquidating inventory at discounted prices, fueling bearish market sentiment and reinforcing buyers' reluctance to purchase in a falling market. Mainstream cell prices have now fallen to around RMB 0.28/W.

By wafer format, 183 mm cells face the greatest downside risk due to a sharp decline in demand from India and aggressive inventory clearance by major manufacturers. 210R cells are also under significant pricing pressure because of high inventory levels. In contrast, 210 mm cells continue to outperform the other two formats, supported by demand from utility-scale solar projects.

PV Modules

The module segment is being squeezed by weaker-than-expected market demand and rapidly declining production costs. As upstream cell prices have fallen sharply, cost support for module pricing has effectively collapsed. Driven by bearish market sentiment, leading manufacturers have implemented substantial price cuts, with mainstream module prices falling to RMB 0.69-0.71/W. Tier-2 and tier-3 manufacturers have followed suit, lowering prices to RMB 0.67-0.69/W, while distressed sales at even lower prices have become increasingly common.

Current procurement activity is mainly driven by purchases of low-priced products, just-in-time inventory replenishment, and deliveries under previously awarded contracts. With the industry still firmly in a downward pricing cycle, downstream buyers remain cautious and largely on the sidelines, slowing overall transaction activity. Module prices are therefore expected to remain under pressure in the coming weeks.