N-type solar cell scheduled production is 47GW in June; production cut or suspension will continue due to oversupply

According to the SMM survey, from May to June, some photovoltaic cell producers were unable to withstand the market pressure and chose to cut or even halt production. However, there were still some companies that increased production against the trend, mainly because the new and upgraded Topcon cell capacity for 2024 was concentrated in Q2 and early Q3. From the supply and demand in May and June, photovoltaic cells were still in a phase of inventory accumulation, and the wave of production cuts and halts in June is expected to continue.

In May 2024, the operating rate of Chinese PV cell producers was 68.81%, with an actual output of 62.05 GW, up 0.3% MoM and 34.45% YoY. Among them, the output of N-type cells was 46.14 GW, up 4.74% MoM, accounting for about 74% of the total output. In contrast, the output of P-type cells was 15.91 GW, down 10.77% MoM. PV module producers stocked up on low-price cells in April, leading to high inventory. The external procurement of cells weakened MoM in May, resulting in high inventory levels for PV cells. Major producers increased production due to the ramp-up of Topcon production lines, while some small and medium-sized cell makers reduced their operating rates to control inventory.

Early May 2024 began with a sharp decline in PV material prices, causing various segments to suffer losses. Although the demand for N-type cell modules increased much faster than expected, the supply growth rate significantly outpaced the demand growth rate, leading to an imbalance. As a result, the inventory of the four main PV materials remained high, and prices quickly fell below the cost line, highlighting the liquidity risk for companies. Following the price drop, a wave of production cuts ensued. The current market is in a back-and-forth negotiation between companies. The cost reduction strategy of integrated capacity layout has temporarily failed in the current market environment, with integrated manufacturers facing losses in multiple segments. The current market is a contest of the comprehensive strength of companies.

Looking ahead to June, due to the continued losses and poor orders of PV cell makers, it is expected that the scale of cell production cuts will expand, and small cell makers will gradually cease production. However, the ramp-up of production lines at large cell makers will continue. Overall, the planned production of PV cells in June is 58.69 GW, down 5.4% MoM, and the actual production may be lower than the planned level, with an operating rate of 63.41%.

Specifically, in June, the planned production of P-type cells is 11.17 GW, and N-type cells is 47.07 GW. The planned production of N-type cells by companies in June varies, with the increase mainly coming from the ramp-up of Topcon cells by a leading cell maker and the increase in scheduled production driven by the demand for HJT cells. The supply from manufacturers that have already ceased or reduced production has a minimal impact on the overall market supply and demand. The planned production of N-type modules in June is only around 38 GW, with the demand being less than 40 GW. The oversupply of cells in June will put greater operational pressure on specialized cell makers compared to May. Even the Top 5 specialized cell makers will face significant liquidity challenges. According to the SMM survey and analysis, the scope of cell production cuts will continue to expand in early to mid-June, and the actual production in June will be difficult to reach the current levels panned by companies.