The increased stockpiles and volatility in the solar panel market as a result of oversupply and geopolitical turmoil respectively, have accelerated the price slump globally. In particular, the slower demand in China has triggered fears over solar price turbulence, not just in China but across the Asia, with potential spillovers for the global market. As sentiment turns extremely pessimistic for the demand outlook for 3Q16, the 2nd tier Chinese module suppliers aggressively lower price quotes near USD 0.42/watt in order to win more solar projects and to digest their increasing production output.

The increased stockpiles and volatility in the solar panel market as a result of oversupply and geopolitical turmoil respectively, have accelerated the price slump globally. In particular, the slower demand in China has triggered fears over solar price turbulence, not just in China but across the Asia, with potential spillovers for the global market. As sentiment turns extremely pessimistic for the demand outlook for 3Q16, the 2nd tier Chinese module suppliers aggressively lower price quotes near USD 0.42/watt in order to win more solar projects and to digest their increasing production output. With such aggressively offering, the 1st tier Chinese module suppliers are forced to offer lower price quotes in order to maintain its competitiveness. The escalating competitions combined with the recent depreciation of RMB have led the solar panel price in China slumping noticeably this week. Meanwhile, Chinese module suppliers also intend to increase the shipment to other markets, particularly in India and the US, to compensate the worse-than-anticipated sales in China. Although India is a low-price oriented market, the booming solar potential is definitely one of the solutions for Chinese module makers to get rid of stockpiles. Hence, despite the intense competition among local rivals, Chinese 2nd tier players also step into the Indian market with low-priced solar panels, which quotes near USD 0.42-0.45/watt. On the other hand, Chinese module makers also aim to strengthen its presence and regain more shares with low-priced strategy and trade-friendly capacity in the US market, one of the most lucrative markets in the world. At the meantime, in EU and Japan, although the transactions are relatively limited during the summer vacation, but the volatility in exchange rates have impact the solar panel prices in dollar term. Affected by the Brexit, the slumping Euro has lead solar panel prices in EU drops further in USD term, while solar panel price in Japan remains stable in USD as Yen strengthens. As the result, the escalating price competition fueled by Chinese 2nd tier players has lead the overall solar panel prices drop extensively this week.

Multi-crystalline cell price tumbles to a historical low this week as the outlook for the demand in China darkens while solar panel stockpiles remain ample. As the vicious competitions among downstream module makers intensify, the 1st tier Chinese module makers emphasize more on inventory adjustment and curtail the procurement of outsourced multi-crystalline cells. With the procurement fall sharply, most of multi-crystalline cell makers, who heavily rely on Chinese orders and remain at full productions, are desperate to offer slashed prices in order to secure orders as soon as possible. Moreover, as the price correction of multi-crystalline wafer enlarges, it gives multi-crystalline cell makers more flexibility in term of further price reduction. Consequently, the blurred order visibility and ample supply have pressured multi-crystalline cell makers to offer prices lower than ever in attempt to secure orders. On the other hand, the price drop of mono-crystalline cell enhances this week as the demand plunges after the rush installation in China ended June 30. Moreover, in order to maintain the market shares, mono-crystalline cell makers also offer more price discounts to curtail the outstanding price gap with multi-crystalline cells, leading mono-crystalline cell price to fall more obviously in this week.

Following the slump of multi-crystalline cell, multi-crystalline wafer price sees a largest correction this week. In response to the downstream demand weakness and price slumps, multi-crystalline wafer makers are forced to offer further price reductions. As the leading multi-crystalline wafer manufacturer takes the lead on lowering the price quotes in July noticeably, the 2nd and 3rd tier wafer makers have to offer more competitive prices to secure orders. Since the prices of multi-crystalline wafer are still above the break-even points, it provides rooms for most of the multi-crystalline wafer suppliers to have further price reduction. On the other hand, mono-crystalline wafer falls less than multi-ones as the drop for mono-crystalline wafer price outside of China is relatively limited. However, the price drop initiates sharply in China, where the demand wanes most obviously. As the major Chinese mono-crystalline wafer supplier adopts strategical pricing to align the price correction with multi-ones, the mono-crystalline wafer price in China are further pressured.

The adverse effects of slumping solar prices and weakening demand in China spread from the downstream to the upstream polysilicon, driving the polysilicon price to plummet this week. On the other hand, polysilicon prices outside of China are also being pressured as constrained by the price decline in Chinese market. Moreover, as the leading wafer manufacturer turns more bearish regarding the outlook of the demand, the weakening wafer prices also cause the polysilicon to perform poorly as well.