[SMM Announcement] Announcement on the Addition of the PV Module Cost Index

Dear User,

Greetings!

To help upstream and downstream enterprises in the PV industry chain better grasp the changes in the PV module market, timely reflect the spot market price trends, reduce transaction risks and costs in the PV market, and continuously improve and deepen research on the PV industry chain. After a period of accumulation and market surveys, SMM plans to launch the PV Module Cost Index starting from December 20 as a reference for the market.

I. General Principles of SMM Price Assessment Methodology

Shanghai Metals Market (hereinafter referred to as SMM) is a completely independent third-party service organization that does not participate in any substantive transactions. Instead, it maintains close communication with buyers or sellers involved in transactions as a market observer or organizer and provides relevant services to the market. SMM continuously formulates, reviews, and revises its methodology through communication with industry participants, adopting the most common product specifications, trade terms, and trade conditions in the industry, and attaches equal importance to normal transactions that meet specification standards. SMM reserves the right to exclude any price information deemed less reliable or unrepresentative from its price assessment.

This document specifies the standards for the formulation of the SMM PV Module Cost Index Price. The purpose of SMM in formulating this standard is to establish a transparent and verifiable SMM price assessment mechanism.

II. Formation of PV Module Cost Index Prices

2.1 Definition

The Shanghai Metals Market (SMM) PV Module Cost Index Prices are indicative prices formed and published by SMM based on this methodology. They can be adopted by both trading parties as a reference for settlement in spot trade of N-type TOPCon bifacial double-glass 183 modules. The cost index price is categorized into three types of PV module producers and is primarily calculated using a cost model based on weekly data collected from various types of PV module enterprises, including prices of raw materials, unit consumption, etc., to determine the full cost. This includes taxes (13% VAT), capital occupation costs, three expenses (selling expenses, administrative expenses, and financial expenses), and other related trade costs.

2.2 Newly Added SMM PV Module Cost Index Price Points Are as Follows:

- TOPCon 183 Module Cost Index - Integrated

- TOPCon 183 Module Cost Index - Semi-Integrated

- TOPCon 183 Module Cost Index - Specialized

2.3 Methodology for Quotation Generation

SMM collects data for evaluating PV module cost index prices through price collection (i.e., gathering raw data information that complies with SMM's data standard policies). This includes transaction and intended transaction quotations from buyers and sellers provided by price submitters (i.e., data providers) for the cost items they are responsible for during the week, as well as actual transaction prices of spot cargoes for completed trades provided by price submitters. SMM verifies the unit consumption and unit prices of various raw materials on a daily, weekly, and monthly basis according to their impact on different manufacturing stages, ensuring the accuracy and timeliness of cost index price updates.

The PV module cost index prices are divided into three types based on the production stages owned by PV module producers:

i. Integrated: Externally purchased polysilicon, self-produced wafers, self-produced solar cells, and self-produced modules (Cost = 100% externally purchased polysilicon + non-silicon costs for wafers + non-silicon costs for solar cells + non-silicon costs for modules + three expenses)

ii. Semi-Integrated: Externally purchased wafers, self-produced solar cells, and self-produced modules (Cost = 100% externally purchased wafers + non-silicon costs for solar cells + non-silicon costs for modules + three expenses)

iii. Specialized: Externally purchased solar cells and self-produced modules (Cost = 100% externally purchased solar cells + non-silicon costs for modules + three expenses)

2.4 Price Collection Methods

SMM price analysts regularly collect data related to the PV module cost index prices from price submitters via telephone, email, social software, and other means. Records of all instant messaging and email communications will be archived; details of telephone communications will be summarized and entered into the database. The price data must originate from typical, repeatable transactions between non-affiliated market participants (completely independent financially and legally). SMM price analysts must comply with the "Compliance Policy" when reporting to their supervisors any communication involving coercion or threats, or any attempt to influence the assessment results through inducive offers. Once the price is published, SMM will not make any revisions or adjustments on the same day.

2.5 Product Standards:

Standard: GB/T 9535-1998

Solar Cell Type: N-type TOPCon monocrystalline solar cell (solar cell size 183.75mm)

Solar Cell Arrangement: 144 cells (72 cells)

Module Dimensions: 2,278±2 x 1,134±2 x 30mm

Module Power: 580Wp and above

2.6 Pricing Unit and Presentation Format

The unit is yuan/W, presented in a spot pricing format, inclusive of 13% VAT.

Price fluctuations are rounded to the nearest 0.01 yuan/W, with a minimum fluctuation of 0.01 yuan/W.

2.7 Update Time:

Updated every Friday at 12:00 PM Beijing time (excluding statutory holidays and weekends).

III. Methodology Changes

All markets evolve, and SMM has the responsibility to ensure that the methodology for market reporting evolves in sync with the market. Therefore, SMM will conduct regular internal reviews of the methodology's appropriateness based on industry feedback. For all substantial but non-urgent potential modifications, SMM will follow a formal external consultation process. Major changes will then be announced with at least 28 days' notice, inviting industry participants to comment, unless special circumstances, particularly force majeure (natural disasters, wars, exchange bankruptcies, etc.), lead to a shortened notice period. SMM is committed to carefully reviewing all comments regarding proposed methodology changes, but in certain cases, it may have to make changes to the methodology against the wishes of some market participants. Additionally, SMM has a formal methodology consultation process.

SMM Information & Technology Co., Ltd.

Silicon-Based PV Research Team

December 18, 2024