Will Domestic Silicon Wafers Prices Crash Again?

According to SMM data, since mid-April 2023, silicon wafer prices have stopped rising before falling, with the price drop accelerating at the end of April. Prices of mainstream 182 mm silicon wafers were even lowered twice within a day before Labour Day holidays.

SMM believes that the main reason for the decline in the price of silicon wafers is the overproduction and the downstream costs.

Polysilicon prices have continued to decline in 2023, while prices of silicon wafers were stable bolstered by the quartz sand market. This increased the profits of silicon wafers. According to SMM statistics, the profit of a single silicon wafer has exceeded 1 yuan/piece for a long time, and even reached about 1.3 yuan/piece. This boosted the production enthusiasm of silicon wafer enterprises, and the operating rates of silicon wafers rose from 60% at the beginning of the year to a maximum of 80%.

Silicon wafer production reached about 47 GW in April, an increase of 34.2% from February. But at the same time, the growth of downstream demand has lagged behind the growth in supply. The output of modules in March-April was significantly lower than that of silicon wafers and solar cells.

This has to a certain extent caused the continued accumulation of silicon wafers. Domestic silicon wafer companies had reduced their inventory to 300 million pieces after Chinese New Year holidays, while the current silicon wafer inventory has reached 90 million pieces. The excess supply and the accumulation of inventory make it difficult for the prices of silicon wafers to stay high.

Meanwhile, the prices of cells did not rise with silicon wafer prices, eroding into the profits of cells. According to SMM statistics, the current profit of 182 mm cells is only 0.03-0.05 yuan/w, way below the previous 0.08-0.1 yuan/w. As a result, many solar cell plants pushed for lower silicon wafer prices which stood at 6.5 yuan/piece.

Nonetheless, prices of 182 mm and 210 mm silicon wafer have diverged, and the latter was much more resistant to declines compared to the former. As of May 4, 182 mm silicon wafer prices fell by 0.3 yuan/piece compared with mid-April, while 210 mm silicon wafer prices only dropped by 0.08 yuan/piece. This is due to stronger downstream demand for high-efficiency modules and cells. At present, the supply of cell market diverges. Demand for large-size cells with an efficiency of more than 23% is obviously stronger than that of other low-efficiency cells. In this scenario, some leading companies will reportedly increase the proportion of 210 mm silicon wafer production.

SMM believes that silicon wafer prices will not crash like the last round of price declines in the foreseeable future. There are several key points that caused the last round of price collapse, including price cuts by two leading companies. At present, the leading companies continue to bolster the market, keeping prices firm.

In addition, the slump in demand driven by multiple factors such as the pandemic, project delays, and the Chinese New Year holidays resulted in a surge in inventories, which caused the last round of sharp price declines. The end-user demand will continue to improve in the long run. There are no signs of significant volatility in supply, demand and market sentiment.

Moreover, prices of inner quartz sand which currently stand close to 400,000 yuan/mt will give support to the prices of silicon wafers.

SMM believes that in 2023, the prices of silicon wafers will inch down amid falling polysilicon prices and ample raw material supplies.