PVinsights: Beleaguered Solar Risks More Pain amid Overcapacity

Global panels are recorded at new lows as evidence of uneven supply and demand in the biggest solar market fuels pessimism that it continues to deteriorate the oversupply further by way of additional capacity and the demand weakness by the restricted FIT policy. Nevertheless, the drop of solar panel prices this week is more tenderly this week due to the limited declines in the Chinese and Indian markets. As 2nd tier Chinese module makers have dominated the prices disruption in China, India, and the emerging countries, where no punitive tariffs were enforced, the module prices have slumped more than 5% in the past three weeks. The flexibility for Chinese module makers to offer slashed prices has become less after the sharp fall, resulting the solar panel prices in China and India decline more slightly this week.

Global panels are recorded at new lows as evidence of uneven supply and demand in the biggest solar market fuels pessimism that it continues to deteriorate the oversupply further by way of additional capacity and the demand weakness by the restricted FIT policy. Nevertheless, the drop of solar panel prices this week is more tenderly this week due to the limited declines in the Chinese and Indian markets. As 2nd tier Chinese module makers have dominated the prices disruption in China, India, and the emerging countries, where no punitive tariffs were enforced, the module prices have slumped more than 5% in the past three weeks. The flexibility for Chinese module makers to offer slashed prices has become less after the sharp fall, resulting the solar panel prices in China and India decline more slightly this week. However, solar panel prices in Japan, the US and EU fall more obviously as Chinese module makers shift their battlefield more towards these regions since these regions have more rooms for the price reductions. On the other hand, unlike multi-crystalline module prices suffer from the deteriorated competition on utility projects, mono-crystalline module fall rather limitedly as the demand is more sustainable in the residential market. As the result, the vicious pricing competition lead by Chinese module makers have also forced non-Chinese suppliers to adapt lower price quotes, leading overall solar panel prices remain pressured this week.


Lasting oversupply and ambiguous order visibilities continues to weigh on the multi-crystalline cell prices, as high inventory levels have almost suffocated multi-crystalline cell makers. Despite an obvious reduction in production rates, solar cell makers still have ample stockpiles on hand that need to be digested. Meanwhile, as the demand in China freezes, Chinese module suppliers are increasing their control over inventories and curtailing their orders on outsourcing solar cells. Most solar cell makers, who heavily depend on Chinese orders, could only see less than 2 weeks of the order visibilities. Multi-crystalline cell buyers not only reduce their appetite in procurement, but also ask for high efficiency cells with lower prices and leave medium/low efficiency cell stockpiles abundant to suppliers. Without the bargaining power, most solar cell makers can only comply with the slashed prices for higher efficiency products and dump their excess inventories of lower efficiency product to India, which is the low-price oriented market that continuing to drag multi-crystalline cell price down. Moreover, with the declining multi-crystalline wafer prices, solar cell makers still have rooms for the further price reduction. Similarly, as downstream demand and multi-crystalline cell prices continues to decline, mono-crystalline cell price also drops accordingly.

Multi-crystalline wafer prices plummet obviously this week. As the solar cell makers have obviously lowered productions, the conservative procurements for multi-crystalline wafer have exerted great pressure on the 1st tier suppliers. Moreover, some of the 1st tier multi-crystalline wafer buyers also ask for slashed prices that pressure 1st tier multi-crystalline wafer makers to comply. In addition, the 2nd tier multi-crystalline wafer suppliers, with the limited customer bases, are also forced to offer more competitive pricing in order to maintain the market shares. On the other hand, mono-crystalline wafer prices drop accordingly following the slump of multi-ones due to the strategical pricing to align the price gap with multi-crystalline wafers that leads by the top mono-crystalline wafer makers.

However, polysilicon prices fall only incrementally this week. Regardless of the downstream slumps, polysilicon suppliers in China are still reluctant to lower prices accordingly, as most of the wafer makers have yet to lower production output significantly. Since Germany and Korean polysilicon suppliers follow Chinese players lower their prices slowly, overall price drop has shown limited. Furthermore, the US suppliers, with the lowest price offer, are having the orders outside China so as to lower their price quotes tenderly this week. As the result, overall polysilicon prices declines marginally this week.

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