PV Module Production Cuts Are Cooling The Industry Chain's Upstream, Potentially Undermining Solar Cell Prices In September

SHANGHAI, Sep 5 (SMM) – In September, polysilicon, silicon wafer, and solar cell production schedules kept rising, while PV module production schedules dropped by 5% from August, significantly impacting market mood. Prices of polysilicon and silicon wafers increased in August and September due to high solar cell production schedules and low stocks, but the price rise struggled to reach solar cells due to slim module profits. Some smaller manufacturers cut or halted production due to high costs and insufficient revenue. Calls for "solar cell price reductions" are intensifying. What will happen to solar cell prices next?
Firstly, let's examine the demand trend for PV modules. As per SMM, the expected order volume for PV module companies in September is unstable, and actual future orders may fluctuate. Per SMM's incomplete statistics, as of August 27, the total bid volume of PV module for August was roughly 10.72GW, a 50.9% drop from the same period in July. In August, distributed PV projects saw high procurement and delivery demands, but large-scale procurement for centralized projects didn't significantly increase. This shortfall led to overall demand not meeting expectations, resulting in insufficient market orders. Frequent price negotiations between downstream terminals and PV module factories cause the terminals to have some concerns and considerations about supply assurance, weakening their enthusiasm for taking deliveries. On the other hand, the differentiation in the module market is severe, internal competition is intensifying, and there is a substantial price gap between different manufacturers. Second and third-tier companies have shown signs of raising their quoted prices, while first-tier companies continued to maintain low prices to ensure market competitiveness, putting pressure on other companies. As a result, the phenomenon of cost price inversion continued to exist in the PV module market. PV modules have become the segment with the smallest profit in the photovoltaic industry chain. Some smaller factories are even operating at zero profit or at a loss, which negatively impacts their production enthusiasm. However, under the current circumstances of frequent low-price competition for orders among PV module companies, delayed demand stimulation, and relatively high inventory levels, the possibility of PV module price increases is low. This will continue the profit predicament, and if the current solar cell prices remain high, PV module production may continue to decrease.
Continuing to observe the supply situation of polysilicon and silicon wafers upstream of solar cells, the current polysilicon inventory of crystal pulling factories is very high. This is mainly due to the significant increase in demand in the photovoltaic upstream market in August. Many crystal pulling companies have increased their raw material inventory, and their procurement of polysilicon far exceeds their own production demand. The polysilicon inventory of some companies is even as high as 40,000-50,000 mt. These factors have resulted in a serious imbalance in the supply and demand of polysilicon, causing the price of polysilicon to rebound. In September, the domestic production of polysilicon will significantly increase, ahead of the expected new capacity at the beginning of the third quarter. The current production schedule of PV modules is declining, which will accelerate the accumulation of polysilicon inventory. Between September and November, as solar cell production ramps up, so does the demand for silicon wafers, with supply keeping pace. Currently, silicon wafer profits are rebounding, and manufacturers are eager to produce. However, should PV module production cuts deepen, they will likely curb the price of silicon wafers, limiting their potential for price increases.
In the current market, solar cell supply has now exceeded the crunch experienced in July and August. From September, with the increase in production volume of N-type Solar cells, the proportion of N-type in modules will also increase, which will in turn negatively impact the demand for P-type Solar cells. We anticipate that from September to December, the monthly capacity increases of topcon will be 47GW, 60.4GW, 74.4GW, and 51.7GW respectively. However, due to market demand constraints, the N-type startup rate in the fourth quarter is estimated to be 50%. The market's concern about the accumulation of solar cell inventory is increasingly intense, and a bearish sentiment is gradually emerging at present. In the short term, due to low inventory and growing demand, silicon wafer prices are rebounding, squeezing solar cell profits. Top solar cell manufacturers are keeping prices high to protect profits, with strong bargaining power. Smaller solar cell manufacturers, with weaker bargaining power, are somewhat flexible in pricing. Photovoltaic solar cells are under dual pressures: rising upstream costs can't be shifted downstream, and there's even risk of falling prices, making it hard to reverse the profit decline. Yet, with fierce market competition, lowering prices to stimulate downstream demand may push silicon wafer prices up. Considering current market conditions, maintaining prices is the popular short-term choice.
As new Topcon solar cells enter the market in September, both PERC solar cells and existing Topcon markets face some impact. PV modules are in a surplus. As solar cell consumption is less than its production, solar cell producers are under mounting pressure to sell. This could help counteract the rise in silicon wafer prices. With the potential decline in market share and a monthly increase in new supplies, solar cell manufacturers will likely reduce prices to maintain market share. Hence, solar cell prices are likely to decrease in September.