Downstream manufacturers hesitant, multi-Si price of $45/kg in sight

TAIWAN: Regrettably, the EU PVSEC has ended without any uplifting news. According to EnergyTrend, the green energy research division of TrendForce, the German market’s installation volume for June to August was approximately 2GW, with a projection of around 1GW for September. Thus, Germany is expected to see another wave of downward adjustments in the middle of the year, estimated at over 10 percent.

Subsequently, yearly subsidies will show an overall decrease of over 20 percent for 2012. As the European market currently relies heavily on Germany and Italy for support, EnergyTrend expects that the aforementioned developments will have a significant impact on the growth of the European market.Source: EnergyTrend, Taiwan.

In terms of raw materials, according to EnergyTrend’s survey, the current polysilicon contract inventory level is far higher than the actual order demand. Therefore, some manufacturers start to close out all their stocks for cash, in order to alleviate the inventory and financial pressure. EnergyTrend believes that the situation will not improve in the short term.

EnergyTrend estimates that the polysilicon spot price will come to $45/kg in 4Q11. Moreover, if the spot price and contract price gap widens, buyers must re-negotiate with sellers to close price gap. If the market demand remains stagnant, manufacturers might still close out their contract inventory, causing a even higher price pressure on the polysilicon makers. EnergyTrend’s survey indicates that the polysilicon price was between $54/kg~$42/kg, and the average price has decreased by 1.26 percent to $49.38/kg.

After the conclusion of EU PVSEC, EnergyTrend indicated that the Si wafer, solar cell, and module prices have fallen below the previous bottom line prices. The lowest prices for multi-Si wafer remained at $1.8/piece, while the mono-Si wafer price threshold remained at $2.4/piece. Moreover, the solar cell trading price has declined to $0.7/Watt, while the lowest surveyed price has dropped to $0.68/Watt.

The lowest surveyed price for PV module is hovering over $1.0/Watt. According to EnergyTrend, Si wafer average price has not changed from last week, while the solar cell average price declined by 1.1 percent to $0.72/Watt and the PV module average price decreased by 1.32 percent to $1.124/Watt.

Looking toward Q4, EnergyTrend expects the following target prices: multi-Si wafer $1.85-1.75/piece; battery $0.7-0.65/Watt; module $1.0/Watt. EnergyTrend believes that as the market is not conducive to demand recovery, future price decreases are inevitable and the Q4 profit outlook for manufacturers is unfavorable. As middle manufacturers’ profits suffer, manufacturers that were more profitable in 1H11 may be pressured to satisfy clients by adjusting price.