June N-type Cell Production at 47 GW, Production Cuts and Halts to Continue Amid Oversupply [SMM Analysis]

According to the latest survey by SMM, from May to June, some solar cell companies could not withstand the falling prices and chose to reduce or even halt production. However, some companies increased production against the trend, mainly due to the concentrated commissioning of new and upgraded TOPCon solar cell capacity in Q2 and early Q3 of 2024. In May and June, solar cells were still in a phase of inventory accumulation, and the trend of production cuts and halts will continue in June.

In May 2024, the operating rate of Chinese solar cell companies was 68.81%, with actual output reaching 62.05 GW, a MoM growth of 0.3% and a YoY increase of 34.45%. N-type cell output was 46.14 GW, a MoM increase of 4.74%, accounting for about 74% of the total output. In contrast, P-type cell output was 15.91 GW, a MoM decrease of 10.77%. Module manufacturers stocked up on cells at low prices in April, leading to high inventories in May. The procurement of cells weakened MoM, and solar cell inventories were high in May. Mainstream producers increased production due to the ramp-up of TOPCon production lines, but some small and medium-sized cell manufacturers lowered operating rates to control inventories.

The beginning of May 2024 saw a sharp decline in PV material prices, with various segments of the PV industry chain falling into losses. Although the demand for N-type cell modules increased faster than expected, the supply growth rate significantly exceeded the demand growth rate, leading to an imbalance. The inventories of the four major battery materials were high, and prices quickly fell below the cost line, highlighting the risks of market liquidity. Following the price drop, a wave of production cuts ensued.
In June, as solar cell manufacturers remain in a loss and order conditions are poor, the scope of production cuts is expected to expand, and small cell manufacturers will gradually stop production. However, the ramp-up of production lines for large cell manufacturers will continue. Overall, the planned production of solar cells in June is 58.69 GW, a MoM decrease of 5.4%, and the actual output may be lower than the planned level, with an operating rate of 63.41%.

The planned production of P-type cells in June is 11.17 GW, and N-type cells are 47.07 GW. The planned production of N-type cells in June varies, with the increase mainly contributed by the ramp-up of TOPCon cells by a top battery maker and the increased production of HJT cells due to boosted demand. The supply from manufacturers that have stopped or reduced production has little impact on the overall market supply and demand. The planned production of N-type modules in June is only about 38 GW, with demand for N-type cells below 40 GW. The oversupply of cells in June will put more pressure on specialized cell manufacturers compared to May. Even the top 5 specialized cell manufacturers will face significant challenges in market liquidity. According to SMM survey and analysis, the scope of production cuts will expand in mid-to-late June, and the actual output in June will be difficult to reach the current planned level.