PVinsights: Demand Weakness Firming

Polysilicon in China dropped consecutively for two straight weeks as strong selling pressure in the downstream wafer sector has crept into the market. The price of polysilicon for multi-crystalline wafer were obviously under pressured as many polysilicon buyers started canceling their original polysilicon orders and cutting their production utilization rate amid waning downstream demand. However, high purity polysilicon for the use of mono-crystalline wafer remained tight as major mono-crystalline wafer makers in the stage of aggressive capacity expansion has yet to slow down their pace of procurement to build strategic ingot inventory, continuing to push the price for high purity polysilicon higher amid RMB appreciation. As polysilicon prices were now above the market's affordability and the market sentiment clearly dwindled, more Chinese buyers struggled to keep their pace of procurement growth.


Polysilicon in China dropped consecutively for two straight weeks as strong selling pressure in the downstream wafer sector has crept into the market. The price of polysilicon for multi-crystalline wafer were obviously under pressured as many polysilicon buyers started canceling their original polysilicon orders and cutting their production utilization rate amid waning downstream demand. However, high purity polysilicon for the use of mono-crystalline wafer remained tight as major mono-crystalline wafer makers in the stage of aggressive capacity expansion has yet to slow down their pace of procurement to build strategic ingot inventory, continuing to push the price for high purity polysilicon higher amid RMB appreciation. As polysilicon prices were now above the market's affordability and the market sentiment clearly dwindled, more Chinese buyers struggled to keep their pace of procurement growth. In overseas, some non-Chinese polysilicon makers still attempted to have the further price upwards, particularly for some of the Korean polysilicon suppliers, but their attempt did not make sense to buyers as the overseas buyers strengthened cautions on the procurements. Although the polysilicon price downtrend was somewhat offset by the appreciation of RMB this week, the bearish sentiment in the downstream should further enlarge the price downtrend to the polysilicon sector.

Multi crystalline wafer prices settled lower this week as decreased order visibilities showed worsen supply glut, the competition from mono-crystalline counterpart and the declined demand, a triple blow that offset somewhat by RMB appreciation against USD. With the slumping demand in China, the completing transition to diamond-wired multi-crystalline wafer further worsened the supply glut, leading the drop of multi-crystalline wafer price to accelerate this week. On the other hand, mono-crystalline wafer prices extended the losing streak this week amid demand weakness and strengthening supply. Since the wafer production cut by some major mono-crystalline wafer makers is not enough to take effect, and the sentiment failed to see signs of recovery, continued oversupply led the prices lower this week. Nevertheless, the scope of the price correction for mono-crystalline wafer this week was comparatively less than multi-crystalline one, due to substantial prices cut led by top tier mono-crystalline wafer makers earlier.

With the dimmed demand prospects and depressed market sentiment, solar cell buyers were decreasingly sourcing cells to ride the wave of slump before Chinese New Year. With demand backsliding in China, both solar cell makers in China and overseas suffered from increasing inventory levels, propelling fierce price competition to secure orders. While mono-PERC cells have been worst affected by the cooling of global demand, the rest of solar cell products was seeing widespread price reductions, with major buyers globally cutting their asking prices and procurement volumes. Mono-crystalline cell and mono PERC cells still struggled to recover after a searing sell-off. Sentiment seemed to continue deteriorating as concerns that mono suppliers' plans to cut prices still not won buyers' appetite as quickly as expected. For overseas cell makers, the excess supply of mono PERC cells forced them to take drastic measures, such as cutting prices and curtailing utilization rates, until the demand for mono-crystalline products resumes. With the sharp fall of mono-crystalline products, although there were signs that demand for mono-crystalline products gradually recover, the strength of recovery still failed to mark a reversal of price downtrend. For both multi- and mono-crystalline cells, the price drops both widened with exacerbated demand weakness in China.

Module prices were little changed this week, held back in part by Chinese yuan appreciation and mild demand recovery, while recently overflow Chinese modules damped the prices in China and some emerging countries. As module suppliers will fuel price competition in order to win the projects after the Chinese New Year, solar panel prices in China were seeing increasing pressure. Moreover, since recently India government may impose a potential 70% safeguard tariff on China imported modules, the withdrawal of shipment to India further worsen the supply glut in China, leading the price drop to enlarge, although partially offset by RMB appreciation this week. Furthermore, similar situation also witnessed in some emerging countries, where Chinese players have no trade barriers imposed, as panel prices in the regions were pushed lower amid escalated competition. While the outcome on Section 201 to be determined by President Trump is expected to announce in the coming weeks, module prices in the US stayed little changed awaiting the market uncertainty clears. In India, with potential imposition of safeguard tariff, the panel prices rose amid concerns of trade disrupt. Module prices in EU and Japan stayed immobile in regional currencies, but were translated to gains in USD due to dollar weaknesses.

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