PV market review during the Chinese New Year holidays and post-holiday outlook [SMM Analysis]

Silica

There was holiday-induced suspension of many mines during the Lunar New Year. Despite this, most of the mines had silica stocks. With pre-holiday arrangement of orders, delivery of orders will resume after the holiday. In addition, confronted with restricted raw material supply, silicon metal plants mainly consumed silica stocks to keep production during the holidays. With the recovery of shipping after the holiday, there may be some intensive demand.

Silicon metal

Silicon metal plants in production maintained normal production during the holiday. Some may have plans of maintenance and production increase after the holiday. The operating rate of silicon metal plants was high in north China and low in south China. Immune to low temperature weather, silicon metal plants were in normal production in Xinjiang, while plants kept operating rate low in southwest China during the dry season, and showed weak willingness of production resumption in a short run. On the downstream side, grinding plants resumed production around February 16. Polysilicon and DMC plants were in normal production during the holidays. Aluminium alloy plants with different holiday arrangement resumed operation.

Polysilicon

Mainstream polysilicon producers kept production normal, except for some still seeing maintenance or shutdown for technical transformation, which had minimal impact on supply and demand. There were few deals made during the holidays. Polysilicon prices remained unaltered. There will be order signing in February after the holiday. Controllable polysilicon stocks will offer some boost to order signing prices. SMM believed that the prices may be mainly stable with few fluctuations. But transactions may decrease.

Silicon wafer

Silicon wafer production was normal during the holiday, with non-stop furnace system in shifts. Affected by early stockpiling of solar cells and low stocks, silicon wafer plants kept scheduled production high, keeping pushing up current silicon wafer inventory. Trading activity may be limited. There will be silicon wafer production cuts.

Solar cells

Some battery production lines resumed production in February 18-February 25, and may yield products in the second half of this week, while some will not resume operation until the end of February or early March. The operating rate of solar cell producers was less than 50%, but may hike to over 60% next month. Currently, buyers aimed to consume their solar cell stocks. There were no deals concluded during the holiday, but deliveries unfolded. The operating rate of solar cell producers increased after the holidays, making for tight P-type material supply and ample N-type material supply, while demand saw no significant rise. Solar cell prices stabilised.

PV module

Weak production appetites amid soft terminal demand and losses and the holidays significantly weighed down the operating rate of PV module plants in February, seeing expectations of a drop by 10-20% in some plants and 50% in most plants. SMM predicted that domestic PV module production in February may be less than 30GW, down 20% MoM.

EVA/POE/PV film

During the holidays, granules companies maintained normal production, and some switched to other production, which may resume PV-grade EVA granules after the holidays POE granules will maintain normal imports in February, and normal sales will be seen. There was order slip in January and weaker-than-expected orders in February. With restart of downstream sectors, some orders to be met in February will allow PV film makers to meet basic start-up requirements. It is expected that production and demand may gradually recover by early March. If there is pick-up of demand from PV module, PV film supply will increase.

PV glass

During the holidays, PV glass production lines operated normally, and there were no new or cold maintenance of production lines. Start-up of two production lines involved total capacity of 1,850t/d in China. In terms of price, PV glass makers kept offers stable during negotiation period in February. PV glass prices were under great pressure from PV module demand softness, and may inch down in a future, but to a limited extent amid cost support.

PV solder strip

Post-holiday PV solder strip companies arranged production according to their own order situations. Most of them started production after the holidays, while some were in normal production during the holidays. Falling PV module production made a dent in solder strip orders in February, making it difficult for some small solder strip makers to survive. Industry concentration will further increase. It is expected that TCs will be reduced to a certain extent in the future.

Silver powder and paste

After the holidays, most silver powder and paste companies resumed production, and some with more orders started work earlier. However, since the first day of production resumption was Sunday, domestic silver futures market remained shut, leading to no transactions of silver ingots on that day. During the holidays, the market purchases were mainly based on USD-based prices. In addition, logistics was out of service. Under this circumstance, raw material procurement remained stagnant. Logistics resumed operation on February 18. Official purchase and sale of silver will start February 19.

High-purity quartz sand

Post-holiday restart of high-purity quartz sand companies, including some small ones that went offline during the holidays, slightly increased high-purity quartz sand supply. Regarding prices, there were currently few transactions of high-purity quartz sand in China. Most companies continued to saw inventory build-up, leading to expected price erosions, like middle and inner sand prices.

Inverter

Inverter companies had different holiday lengths based on their current orders and production arrangements. At present, most of them resumed operation, while demand remained muted in February. Under this circumstance, inverter prices stabilised, except for prices of some models edging lower. Recovery of bidding and procurement and demand from domestic and foreign industrial and commercial and ground power station will probably boost mainstream high-power model demand at the beginning of Q2.

End applications

There was suspension of most terminal projects and project procurement delivery requirements during the holidays, while some projects with slow construction kept catching up with construction progress for the same period. Procurement and bidding projects were limited during the holidays. After resuming work, power and energy companies will formulate annual project arrangements, PV installation targets, and bidding and procurement plans. Demand will remain low in the second half of February, but domestic terminal demand may pick up in March. In major overseas PV markets, PV supply and prices remained stable in a slack season. If the Red Sea transportation problem lingers, stockpiling of some buyers may be seen in March or April. There will be red-hot PV module demand amid policy fallout in India.