Supply and demand mismatch leads to continuous price decline: High-Purity Quartz Sand H1 Review and H2 Outlook

Half a year has passed, and in 2024, the photovoltaic market has entered a prolonged downward trend. Prices of both primary and auxiliary materials in the photovoltaic sector have continued to decline, with some products even falling below the cash cost line, putting immense pressure on the industry. Against the backdrop of an overall weakening in the photovoltaic sector, the price of high-purity quartz sand, a relatively high-profit segment, has also started to decline, dropping sharply from 415,000 yuan/mt in January this year to the current 75,000 yuan/mt.

By stages, in Q1, the overall performance of domestic high-purity quartz sand was stable with minor fluctuations. Sand companies mainly fulfilled annual orders, and due to the weakened demand for PV wafers, there were no transactions for high-purity quartz sand. In Q2, the overall domestic PV demand rapidly weakened, the inventory accumulation of main materials accelerated, and prices fell below cash costs. Driven by cost pressures, the prices of auxiliary materials began to decline. Due to the low transactions of high-purity quartz sand in the previous period, its inventory was relatively higher compared to other segments. Additionally, the price of imported sand was more favorable, leading to a rapid decline in quartz sand prices.

Regarding supply and demand situation, domestic high-purity quartz sand market quickly shifted to an oversupply pattern in H1 this year1HHdjjj. Production side, with the ramp-up of domestic production lines and the influx of semi-finished products from overseas, the output increased steadily, albeit at a slightly lower rate. Demand side, overall demand was weak in H1, with only PV wafer production in March being relatively high, which boosted demand somewhat. However, after March, demand quickly fell again, and the oversupply situation continued to worsen.

For the H2 supply and demand forecast, SMM believes that the overall situation will remain in a state of oversupply. With the entry of new players in H2, domestic supply will continue to increase. Although the supply increase is mainly in the middle and outer layers of sand, there will also be a small amount of inner layer sand. The domestic price competition will also begin. Against the backdrop of weak demand, the price decline trend is quite evident. Additionally, the expected rise in PV module production schedules this year is also weak, leading to poor overall demand performance. As domestic supply starts to increase, the supply-demand pressure is significant. Prices are likely to enter a long-term downward trend and return to pre-2022 levels.

For the subsequent price forecast, SMM believes that quartz sand prices will continue to decline, mainly for the middle and inner layers. The main reason, according to SMM, is that the overall profitability of the photovoltaic industry is poor, leading to a strong tendency to suppress prices for both main and auxiliary materials. The prices of main materials have dropped significantly in the early stages, and now the focus is shifting to suppressing the prices of auxiliary materials in the non-silicon cost segment. Additionally, the overall market supply and demand situation for quartz sand has shifted to an oversupply. Crucible companies plan to suppress sand prices back to 2021 levels, so it is expected that quartz sand prices still have room to fall and have not yet touched the cost line.

Overall, high-purity quartz sand will begin to replace imports with domestic products. Due to the poor overall photovoltaic market, the speed of demand growth is not keeping up with the supply growth, leading to a supply-demand mismatch and a tendency for prices to bottom out. However, the future photovoltaic installation is expected to reach 540GW by 2025, indicating that future demand performance is still promising, and prices may have the potential to rise with fluctuations. Additionally, the current industry profitability remains considerable.