AD/CVD Ruling and Overseas Capacity Expansions Are Variables to the Current PV Boom, According to TrendForce

China’s National Reform and Development Commission has announced that there will be no significant reduction in feed-in tariff (FiT) rates for the country’s photovoltaic (PV) power plants in 2016. In its report on improving FiT policies for onshore wind and PV electricity, the commission states that the FiT rates for solar energy resource region one will drop by 5.56% next year. Region one refers to western sections of China (Ningxia, Qinghai, Xinjiang and etc.) that are under a more severe electricity rationing regime. For solar resource region two and three, the rate reduction will be less than 5%. Region two includes Beijing, Tianjin and parts of western/central China that are under less severe electricity rationing; whereas region three covers eastern sections of China that have not experienced much electricity rationing as well.

This announcement is not going to dampen the boom in the construction of PV power plants in China while the country’s central government promotes the nation’s 13th Five-Year Plan, according to Corrine Lin, analyst at EnergyTrend, a division of TrendForce. Conversely, Lin expects that the change in FiT rates will result in a moderate increase in China’s installation demand next year, and prices across the PV supply chain will also continue to rise.

Lin said: “Prices are projected to rise in November and December. However, the market outlook for the end of this year remains uncertain due to the following factors. First, there is the ongoing PV trade dispute between China and the U.S. and the outcome of anti-dumping and countervailing tariffs (AD/CVD) review is still pending. Second, major Chinese PV firms such as Jinko Solar, JA Solar and Trina have expanded their production capacity in foreign countries. How much of an impact their overseas activities will have on the market is yet to be determined.”

Lin added that if the U.S. made concessions to China during the trade negotiation and kept AD/CVD rates low, companies that would be first lose out include those already enjoying low rates or are exempted from tariffs. Cell manufacturers that are able to trade at higher prices by producing outside China and Taiwan would be negatively affected as well.

Polysilicon prices may rise as orders stream into different parts of the supply chain

Polysilicon prices in China remain depressed despite the closing of the processing trade loophole. Though tariffs are blocking imports from major U.S. suppliers such as REC Silicon and Hemlock, the country still allows polysilicon from OCI and Wacker. Imports and excess domestic capacity therefore have created an oversupply situation that currently puts pressure on Chinese polysilicon prices. On the other hand, EnergyTrend’s latest price report notes that China’s new FiT rates will help keep demand high in the Chinese polysilicon market though the first quarter of next year. The country’s polysilicon prices may even bump up a bit in relation to the increases in multi-Si wafer, cell and module prices.

Multi-Si wafers and cells are now in tight supply and their prices have risen accordingly. Moreover, wafer and cell companies are also negotiating for more favorable payment terms as most Chinese firms are fully booked until the next Chinese New Year holidays. Taiwanese firms are starting to negotiate prices for December as well. The multi-Si wafer and cell markets have generally been very hot.

In the module market, some products are seeing incremental price increase. Next year’s FiT rates announcement have led to a build-up of demand in China as module buyers are rushing to stock up before prices go up again. Module manufacturers have been so busy lately that some are unable to accept new orders. EnergyTrend expects that price increases will become more noticeable in the near future and this uptrend will last to the end of this year.