SMM Silver Industry Price system and the Future of Photovoltaic Industry chain pricing [Silver Forum]

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At the 2021 China International Silver Industry chain Summit Forum and China Silver Market Application Symposium hosted by (SMM) of Shanghai Nonferrous net Information Technology Co., Ltd., Lu Jialong, senior vice president of Shanghai Nonferrous net, introduced the future of SMM silver industry price system and photovoltaic industry chain pricing. He said that at present, most of the domestic manufacturing industry is in a stage of transition from overheating to trough, in which profits have fallen sharply to the edge of profit and loss, supply exceeds demand, and enterprises are thinking about reducing transaction costs. While the market growth rate fell back to a stable range, the share of Top3-5 enterprises expanded rapidly, squeezing out the living space of small and medium-sized enterprises, the market focused on R & D and industrial chain expansion, the head of enterprise profit space growth. The development strategy of the enterprise is to pursue the large-scale effect and the stability of the supply chain. Stable sales and procurement can give enterprises stable production and stable profits. The third-party price benchmarking is not a tool to help enterprises make profits through price speculation, but to help enterprises avoid the risk of price fluctuations in the sales of raw materials and products, so as to stabilize profits, stabilize production and produce large-scale effects.

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SMM1# silver price system

At present, most of the domestic manufacturing industry is in the stage of transition from overheating period to trough period. At this stage, profits drop sharply to the edge of profit and loss, supply exceeds demand, and enterprises think about reducing transaction costs. While the market growth rate fell back to a stable range, the share of Top3-5 enterprises expanded rapidly, squeezing out the living space of small and medium-sized enterprises, the market focused on R & D and industrial chain expansion, the head of enterprise profit space growth. The development strategy of the enterprise is to pursue the large-scale effect and the stability of the supply chain.

Stable sales and procurement can give enterprises stable production and stable profits. The third-party price benchmarking is not a tool to help enterprises make profits through price speculation, but to help enterprises avoid the risk of price fluctuations in the sales of raw materials and products, so as to stabilize profits, stabilize production and produce large-scale effects.

What are the benefits of benchmarking + /-adjustment? Pricing is more transparent, transaction costs are lower, and can better reflect the advantages of high-end brands-SMM price + brand rising water, balanced distribution of industrial profits (losses).

This year, with the epidemic under control, especially the gradual recovery of China's economy and consumption, SMM believes that China's silver consumption is expected to return to 8800 tons in 2021, that is, basically the same as in 2019.

In the downstream application of silver, globally, India, China, the United States and Japan are the main consumers, accounting for nearly 80% of the total global consumption. Of course, from the point of view of the consumption structure of different countries, there are great differences.

India has a high enthusiasm for silver jewelry and value preservation, so their consumption of silver and silver bars accounts for more than 80%. Japan's industry, especially the electronics industry, is relatively developed, so Japan's industrial silver consumption is as high as 90%.

Then China's silver consumption is somewhere in between. In 2020, China's photovoltaic industry accounted for 29% of silver consumption, and 28% of silver was used in electricity, that is, electrical alloys, which are the two largest areas. In addition, silver is also widely used in brazing, electronics, jewelry and other fields.

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Photovoltaic power generation itself has few regional restrictions, stable power generation time, safe and reliable and low pollution, short construction period and other inherent advantages, naturally shouldering the mission of energy revolution.

The development of photovoltaic in China has only experienced a decade from scratch.

The period from 2011 to 2012 was a period when China's photovoltaic manufacturing capacity exploded, with a serious oversupply. And because Chinese photovoltaic products are mainly exported from the beginning, relying on European and American markets, and after the United States and Europe began to file countervailing and anti-dumping lawsuits against Chinese photovoltaic products in 2011, China's photovoltaic industry brought crushing damage. As a result, we have seen a significant decline in the number of new domestic installations in 2014 / 2015.

In 2016 and 2017, before the photovoltaic price adjustment, there was a rush to install in China, and the production capacity increased sharply again. Since then, the increase in production capacity has been relatively flat.

Until last year, when the subsidy policy ended in 2020, and the bidding project ended, the domestic installed capacity of photovoltaic power generation increased by 48GW, up 60% from the same period last year.

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The domestic silver smelter director cooperates with the settlement of SMM1# silver price + rising sticker water:

1. Spot trade

Generally, according to the main contract of the previous stock exchange or the Tender deferred contract of the Gold Exchange + spot premium.

Cash available for spot transaction

Forward delivery: that is, at the time of purchase, determine the purchase price with the customer and agree on the mode of operation of delivery and payment on a certain day in the future.

Forward pricing: that is, when selling, the customer will not set the price first, and the customer will pick up the goods at the provisional price agreed by both parties on the same day plus a certain proportion of the margin payment.

2. Association of refinery chiefs

A long-term purchase and sale contract was signed with the refinery.

The net price is settled by monthly average price plus rising water, or by point price.

SMM Precious Metals Plate-- Building Industry Benchmarking, pursuing Industry coverage and Information coverage

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The quotation time of SMM is 10:05-10:10 every working day (except statutory holidays and weekends), the valuation unit is RMB / kg, showing the form in the form of interval, including tax price (including 13% VAT), the reference quantity is typical to reflect the market circulation of the transaction volume is defined as 100-5000 kg, the place of delivery is factory treasury self-withdrawal, the method of payment is bank cash, the same day to the account.

In 2020, it became the first non-ferrous metal price release platform that passed the independent audit of IOSCO financial index standard.

SMM publishes the price point through a perfect standard adoption system and price methodology.

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The Future of SMM Silver paste Price and Photovoltaic Industry chain pricing

In the final analysis, all the equipment and materials involved in photovoltaic power stations come from raw materials such as silicon, steel, copper, aluminum, silver, rubber, cement, glass and so on.

Among them, photovoltaic silver paste is the core electrode material in the battery structure, which is printed on the positive and negative sides of the silicon wafer to form the battery sheet, which plays an important conductive role.

Among the silver paste, silver powder accounts for 98% of the cost of photovoltaic silver paste. With the progress of the localization of the whole industry chain of silver paste, there is a lot of room for domestic silver paste to play.

As the SMM1# silver price is released before 10:15 on each trading day, the current idea of SMM is to completely unify the silver paste price with the SMM1# silver price, so that buyers and sellers on the silver paste industry chain can better use SMM silver paste price as the benchmark for transaction settlement.

Cells and photovoltaic glass account for 51% and 29% of the cost of photovoltaic modules, with silicon, aluminum, silver, copper, steel, platinum and palladium as the main elements. The sharp fluctuations in commodity prices have done great harm to the industry (terminal).

The double control of energy consumption and power restriction requirements began at the beginning of the year to reduce the production of non-ferrous metals and downstream enterprises throughout the year. Take electrolytic aluminum as an example, from January to October this year, the annualized production capacity of electrolytic aluminum due to double control of energy consumption, power restriction and coal shortage reached 3.2 million tons, accounting for 9% of the total domestic production capacity, of which Yunnan affected production capacity of 1.44 million tons, Guangxi 680000 tons, Inner Mongolia 450000 tons, 2021Q4 to 2022Q1, limited production capacity will still be further increased.

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Generally speaking, the purchasing mode can be divided into four modes: monthly average price, fixed fixed price, long order fixed price + floating share and futures pricing (disk + fixed liter discount).

The price of long order fixed price + floating share is stable, and the upstream and downstream price sharing mechanism is implemented, and the transaction cost is low.

The monthly quarterly annual price forecast of metals helps enterprises to formulate purchasing strategies for metals and materials.

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More business exchanges and cooperation are welcome to contact

Lu Jialong

Senior Vice President of SMM

021-51595830

Loganlu@smm.cn

Huang Di

Senior analyst of Baiyin

021-51595885

Patonhuang@smm.cn

Zhu Wei

Senior Manager of rare and Precious Metals Marketing

021-51595850

Zhuwei@smm.cn