A Sign of Downstream Demand Recovery as Silicon Wafer Prices Pick Up amid Low Inventory?

SHANGHAI, Jan 17 (SMM) - Last week, Longji Green Energy Technology stated on its investor interaction platform that the company's silicon wafer inventory could sustain its production for less than a week. In fact, LONGi Green Energy is not the only one in face of low inventory. According to SMM research, the silicon wafer inventory of major silicon wafer companies are all challenged by dangerously low inventory levels.  

To explain the decline in silicon wafer inventory, the first and forecast cause is the recovery of downstream demand. To be specific, the production ramp-ups of module and solar cell producers have posted a thriving demand for silicon wafer. Second, the poor downstream demand before mid-December and expanding losses were responsible for the production cuts of silicon wafer companies. In addition, the silicon wafer companies did not purchase polysilicon at low prices as they expected the prices to inch lower. As a result, their polysilicon inventory also stood at lows.

It is worth noting that the silicon wafer prices as of January 16 increased to varying degrees, among which the prices of monocrystalline silicon wafer M10 -182mm (150μm) rose by 0.1 yuan/piece to 3.8-3.9 yuan/piece.

Is the increase in silicon wafer prices has something to do with its low inventory? Will the decline in silicon wafer inventory boost silicon wafer prices in the near future?

SMM believes that the major culprit behind the increase in the silicon wafer prices is the price transmission in the volatile photovoltaic market, but of course, the low inventory of silicon wafers surely has a certain impact on the prices.

But at this stage, the inventory of silicon wafers will not make a significant difference to the prices. For one thing, although the recovery of terminal demand boosted the demand for silicon wafer, the current low inventory of silicon wafer is still enough to meet the market demand. And the market is inclined to be stable with the CNY holiday approaching. For the other, module and solar cell producer are expected to resist the rising prices of silicon wafer. 

As for whether silicon wafer inventory will rebound rapidly or continue to shrink after the holiday, it is still too early to say for sure. On top of that, the soaring prices of polysilicon seem to restrict the subsequent raw material procurement of silicon wafer companies.

However, SMM believes that silicon wafer companies are more likely to maintain normal production after the holiday by continuing stocking under the pressure of rising raw material prices. Afterall, silicon wafer companies could also raise the prices to pass the cost pressure.