PVinsights: Solar tumbled, hurt by fragile demand recovery

Although polysilicon suppliers attempted to leverage facility maintenance as a strategy to hold the prices, their attempts failed as major buyers remained conservative at procurement particularly and tried to control low inventory level ahead of the fiscal quarter end. Hence, for 2nd and 3rd tier polysilicon suppliers, who struggled the most from declined orders, the inventory pressure forced them to adapt aggressive pricing for stock clearance, resulting lowered price of polysilicon this week. Meanwhile, despite the declined polysilicon demand from multi-crystalline wafer makers, the demand for high-purity mono grade polysilicon remained solid as the major mono-crystalline wafer makers were still in its expansion phase. Hence, the drop of mono-grade polysilicon prices were relatively limited in contrast with the conventional ones. On the other hand, polysilicon prices in overseas were also set to dwindle further following the accelerated slump of polysilicon in China. Both Korean and American polysilicon suppliers could feel the tremendous selling pressure, as the utilization rates of non-China wafer makers remained depressed. Due to concerns over demand weakness as well as renewed fears that rapid output increase in China flood the market with worsening glut, overall benchmark of polysilicon prices plunged with downstream components.


Although polysilicon suppliers attempted to leverage facility maintenance as a strategy to hold the prices, their attempts failed as major buyers remained conservative at procurement particularly and tried to control low inventory level ahead of the fiscal quarter end. Hence, for 2nd and 3rd tier polysilicon suppliers, who struggled the most from declined orders, the inventory pressure forced them to adapt aggressive pricing for stock clearance, resulting lowered price of polysilicon this week. Meanwhile, despite the declined polysilicon demand from multi-crystalline wafer makers, the demand for high-purity mono grade polysilicon remained solid as the major mono-crystalline wafer makers were still in its expansion phase. Hence, the drop of mono-grade polysilicon prices were relatively limited in contrast with the conventional ones. On the other hand, polysilicon prices in overseas were also set to dwindle further following the accelerated slump of polysilicon in China. Both Korean and American polysilicon suppliers could feel the tremendous selling pressure, as the utilization rates of non-China wafer makers remained depressed. Due to concerns over demand weakness as well as renewed fears that rapid output increase in China flood the market with worsening glut, overall benchmark of polysilicon prices plunged with downstream components.

Without the meaningful price reduction of multi-crystalline wafers, the demand for multi-crystalline products failed to recover in March, leading the multi-crystalline wafer sectors to remain under pressures amid worsening glut. After the lunar New Year, most multi-crystalline wafer makers have retrieved their utilization rates back to full. Price weakness in multi-crystalline wafers was attributed to rising concerns over China's production retrieval of multi-crystalline wafer, following weaker-than-expected orders with China market slowing at faster pace as demand lagged behind. Moreover, with looming fiscal quarter end, the selling pressure was even compounded with increase in inventory level. For mono-crystalline wafers, although the demand for mono-crystalline products seemed to improve, the momentum remained too fragile to hold the prices. Most mono-crystalline wafer buyers remained cautious on procurement before the month end, forcing 2nd and 3rd tier mono-crystalline wafer suppliers to offer price reduction to reduce their inventory levels. Since top mono-crystalline wafer makers did not alter price quotes this week, the price fluctuation was rather limited but stuck in the downtrend.

High inventory of low efficiency cells was constantly blamed for rapid cell price drop over the week - supply chain surveys even suggest this was the key reason why dumping behaviors escalated ahead of fiscal quarter end. As major solar cell buyers raised the threshold higher for solar cell efficiency, there are plenty of mid-to-low efficiency solar cells left for the inventory. The mounting stockpiles forced solar cell makers to adopt drastic measures to cut the prices of low-efficiency cells in order to loosen the inventory levels by the fiscal quarter end. Moreover, a number of fears lingered as major solar cell buyers reassess the prospects for demand weakness in 2Q18, bracing for the possibility of a broader price war and await the deeper solar cell price drop amid oversupply. The overall market failed to rebalance since major solar cell makers tend to normalize utilization rates after the long holiday in February. Similarly, mono-crystalline cell prices saw sustained downtrend despite the sign of demand recovery. Fragile demand recovery would hard to overturn the price downtrend driven by high stockpiles and weak solar wafer prices, particularly as the fiscal quarter end approaches.

Overall module prices dropped consecutively over the week. After the Chinese New Year left demand in China not much changed, our survey shows the major Chinese module makers grew more pessimistic in the need to keep stricter control over inventories amid a weak global demand landscape. Solar panel prices were heading downwards given that global demand strength in 1Q18 was worse than previously anticipated. Worsening oversupply situation in China and emerging countries without tariff imposed stirred the module price war in these regions, driving the regional prices to renew lows. After The Indian Solar Manufacturers Association has withdrawn its anti-dumping petition regarding PV imports from China, Taiwan and Malaysia, more PV module suppliers, particularly Chinese module suppliers, have reinitiated shipments to India, driving the module price in India lower. In Japan and EU, demand remained sluggish, but the adverse effects in prices were partially offset by recent strength in EUR and JPY, resulting limited price drop in USD. In the US, module prices continued to fall as major Chinese solar panel makers slashed prices to sell off inventory building in 4Q17. Following the correction of upstream materials and the looming quarterly financial closure, module prices were under pressure by escalating price competition.

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