The darkest moment arrived in May, with modules extending their decline [In-depth analysis by SMM index analyst]

According to SMM, recent domestic distributed and centralized module prices have seen an expanded decline. The spot price for 182mm distributed TOPcon modules has fallen to 0.693 yuan/W (including tax and freight), with forward delivery prices already below 0.65 yuan/W (including tax and freight), and there is a trend of continued downward pressure; the transaction price for 182mm centralized TOPcon modules has dropped to 0.701 yuan/W (including tax and freight), forming an inverted relationship with the distributed prices. This round of declines began in early April, with module prices down 11.15% from their peak, placing them in a relatively advantageous position within the industry chain.

This price decline originated from demand. According to SMM data, the price drop in the PV entire industry chain in April started from the module end and gradually spread upstream. However, in terms of overall decline, the upstream silicon metal—wafer decline significantly exceeded that of downstream cells and modules, fundamentally due to the supply-demand pattern. Roughly calculated, the days of inventories for silicon metal and polysilicon are nearly 3-4 months, wafers about 2 months, and cells and modules together only slightly over 1 month. The direct manifestation of the supply-demand relationship is inventory turnover, which is why wafers experienced the largest decline in this round of price drops, with a decline exceeding 20%.Although the current round of price reductions and the low point of the industry chain prices in November last year are similar in terms of price, they differ in essence: on one hand, we see a decline in prices across the entire industry chain, and on the other hand, cost reduction in each segment is also quite evident. Since the high point in April, although gross margins have turned from profit to loss, at least cash costs can be maintained.This is the supporting factor for why significant production cuts have not occurred in various segments of the PV industry chain.In addition, we find that specialized enterprises have more advantages in this round of price declines. According to the SMM module cost index, the production cost for integrated enterprises' modules is 0.729 yuan/W, while for specialized enterprises, it is only 0.687 yuan/W, and the inverted phenomenon is expanding. Therefore, if integrated enterprises want to break through, they need to adopt more proactive strategies.

In the medium and long-term, module prices are still expected to maintain a downward trend. Rapid stabilization in May-June will be difficult, and recovery in demand may only be possible after July. Post-531, domestic demand may not experience a cliff-like drop, but it is certain that a significant portion of module orders will be canceled as they cannot be connected to the grid before 531, reflecting the weakening demand expectations recently. From a macro perspective, this round of price fluctuations originated from 531 and started with Document No. 136. I believethe core of this round of power reform policies is to reduce electricity costs for energy-intensive enterprises.Therefore, the short-term pain caused by the demand gap is inevitable, but what enterprises may be more concerned about is whether the reduction in electricity costs can stimulate demand to surge again? Recently, policy implementation documents have been successively released in Jiangsu, Shandong, Inner Mongolia, and other regions. It can be observed that the competition in distributed incremental projects has become increasingly apparent, with mandatory requirements for the proportion of self-consumption of PV power. In the future, the underlying logic of PV will be reshaped. Marketization implies fiercer competition, but this competition is healthy, not through blind {{cut-throat competition}}, but rather through product upgrades and iterations brought about by technological revolutions.