PV Demand Fell Ahead of SNEC as Industry Waits for Clearer Market Outlook, Says TrendForce

Members of the PV industry will be gathering in Shanghai next week for China’s largest solar energy trade show, SNEC 2016. The tradeshow will provide a venue for manufacturers across the PV supply chain to negotiate their orders in June. Therefore, the global PV market will not witness noticeable price fluctuations this month. 

“In the first quarter, major regional markets such as China, the U.S., Japan and India experienced a surge in demand,” said Corrine Lin, assistant research manager for EnergyTrend, a division of TrendForce. “Since the second quarter, however, most PV power plant operators have assumed that PV module prices will be in a steady decline. Thus, demand has slowed down in most markets. India is an exception as the country is busily connecting PV plants to grid before the deadline. In sum, the market is entering off-peak season.”

Prices across PV chain drop as downstream demand starts to cool

Polysilicon prices in China have been rising significantly since the Chinese New Year holidays, reaching RMB 145~150 per kilogram in the recent period. The rising prices have also continued to put the squeeze on the margins of manufacturers in the downstream sectors of the PV supply chain. However, the increase in polysilicon prices will soon start to taper off as REC Silicon has restarted production and Wacker Chemie has expanded its capacity. Activities from these major international suppliers will prevent the possibilities of shortages.

Lin said the demand in the polysilicon market remains strong for now, but cooling demand in the downstream sector is beginning to have an impact. The average polysilicon price is expected to reach its peak for this year in early June, then it will weaken afterwards and decline at a gradual pace because of the slowing demand.

Prices of multi-Si wafers have been on a monthly slide because the large price declines in the PV cell market have created downward pressure on multi-Si wafer prices as well. Prices of multi-Si wafers have arrived at RMB 6.2~6.3 per piece in China and US$0.85~0.86 per piece in Taiwan this month. Prices of mono-Si wafers on the other hand are kept high at US$0.92 per piece on account of strong demand. Lin noted that the price difference between mono- and multi-Si wafers is steadily growing, so mono-Si wafer suppliers may start to cut prices in order to continue expanding the market shares of their products.

In the PV cell market, the price downtrend has moderated this month as most cell manufacturers are weighing the overall market condition for June. Margins of cell manufacturers are already very thin and there is almost no room for them to lower their prices further. However, the first-tier manufacturers have expanded their capacities while second-tier manufacturers are facing excessive capacity. For standard cells, EnergyTrend expects their prices to continue to weaken. As for high-efficiency cells, their prices will soon arrive at the threshold of US$0.3 per watt.

Currently, an installation rush is taking place in China as many PV power plant projects in the country have to be connected to grid before June 30, when the changes to subsidy policies will be in effect. Whether Chinese domestic demand will remain strong afterwards will determine the course of the PV module market from June onward and into the third quarter. The Chinese government has yet to make official announcements on this year’s PV installation target, subsidy programs and other specific industry guidance. Hence, the market demand following this year’s SNEC will be uncertain. Vertically integrated first-tier manufacturers will be able to maintain high capacity utilization rates due to having a large customer base and diverse market channels. The outlook for June from the second-tier manufacturers, however, is more pessimistic as they are experiencing noticeable demand slowdown and inventory pressure. 

Moreover, developed markets such as the U.S. and Japan are witnessing falling prices, while prices of PV modules in India remain low around US$0.45~0.47 per watt. Even though demand is rapidly growing in the Indian market, it is concentrated on low-priced segments. On account of these developments, EnergyTrend anticipates prices across the PV supply chain to continue to be on a moderate downtrend.