According to SMM’s latest statistics, with a steep operating rate decline after the National Day holiday, scheduled silicon wafer production in October has dropped to around 56GW, down 12.5% from a previous estimate of 64GW at the end of September.
According to SMM, much of the blame for the production reduction is a heavy inventory build-up. As of now, domestic silicon wafer producers’ inventory reached about 21GW (2.7 billion pieces), up 27.3% from the end of September. The total silicon wafer stocks held by silicon wafer and solar cell makers were as high as 25.7GW. In addition, pre-holiday demand from solar cell market “slumped”, also driving silicon wafer plants to destock.
On the other hand, silicon wafer prices began to fall before the National Day holiday, and have been in a downward spiral thereafter. Currently, mainstream purchase prices dropped to 2.6 yuan/piece or even lower, down 22.3% from pre-holiday level. Therefore, the sliding prices and pessimism about the future made a big dent in silicon wafer makers’ sentiment. Therefore, the makers cut scheduled productions. Furthermore, there will be a possible dip in operating rate of leading silicon wafer producers. The actual scheduled productions at the end of October may still have some room to shrink.
SMM is still pessimistic over silicon wafer and polysilicon prices. In terms of polysilicon, an abrupt fall in operating rate of silicon wafer makers made polysilicon supply surplus worse. In addition, currently silicon wafer companies are cutting their polysilicon inventory. Under such circumstance, SMM predicts that domestic polysilicon stocks will hike to 80,000 mt by the end of October. Polysilicon prices will also dip in the upcoming new round of order signing at the end of this month.
For silicon wafers, a possible polysilicon price erosion will give silicon wafer producer to more room to cut their own offers to downstream buyers. Silicon wafer market is dominated by downstream demand softness and bearish market sentiment. At present, PV module plants’ production cutbacks are constantly reported. For instance, on October 15 there was even news that a second-tier PV plant cut production by 50% at three N-type bases during the night shift. So did many solar cell producers. And they were cautious in purchasing. Under such circumstance, silicon wafer prices will keep creeping down. Lower-than-expected terminal demand and high PV module inventory of over 120 GW may bring a downward pressure to polysilicon and silicon wafer prices in Q4.