Benefitting from inventory restocking orders, post-CNY solar supply chain price increase brewing

TAIWAN: As Germany’s installation volume for 4Q was unexpectedly high, inventory levels were adjusted significantly – some system makers’ stock levels had even fallen to recent lows. Meanwhile, affected by the uncertainty of Germany’s policies, demand momentum for 1Q12 may be similar to that of 4Q11. According to EnergyTrend, a research division of TrendForce, although European system manufacturers have already begun to place orders, their main priority is still inventory restocking.Source: EnergyTrend, Taiwan.

Since related manufacturers have been continuously receiving European system vendor orders, and previously placed North American orders are currently being shipped, polysilicon and silicon wafer demands are increasing simultaneously. According to EnergyTrend research, as the market status has recovered noticeably in January, a portion of makers are planning to raise product prices after Chinese New Year.

As for polysilicon price, current contract price is around $28-30/kg – after Chinese New Year, it is likely that the prices not be lower than $30/kg. As for silicon wafers, January prices were $1.18-1.2/piece, and will increase slightly, by approximately 2-5 percent to $1.2-1.25/piece.

On the other hand, although Taiwanese solar cell makers’ shipment volume has increased, price has not followed suit. EnergyTrend research indicates, recently solar cell orders have mostly been urgent orders placed by Chinese module makers. While order volume is large, in order to be compatible with module manufacturing process, China makers’ own patterns must be used.

Additionally, as most orders consist mainly of standard products (16.4-16.8 percent), price remains low and these orders do not significantly benefit solar cell makers’ profitability. The main advantage to accepting these orders is the increase in capacity utilization rate.

As for this week’s spot prices, affected by the continuous rise in contract prices, spot prices have begun to increase as well. EnergyTrend research indicates, currently lowest polysilicon price has increased to US$25/kg, and may rise further after the Chinese New Year, to $26/kg or higher. Average polysilicon price increased by 3.03 percent to $27.88/kg.

Silicon wafer prices increased as well, with lowest price at $1.05/piece and average price at $1.155/piece, up by 0.61 percent. As for mono Si wafer price, concluded transaction prices remained the same, but average price increased by a slight 0.13 percent to $1.561/piece.

EnergyTrend believes that the orders for solar rooftop cases that continue to come in will help stimulate high-efficiency product demand, which in turn may keep high-efficiency product price around $1.2/piece. Additionally, Chinese manufacturers previously cut capacity, which reduced supply volume. Now, as urgent orders flood in, supply still seems tight, which has caused the slight increase in standard product prices.

As for solar cells, this week’s average price showed a slight 0.39 percent increase, arriving at $0.514/Watt. As for modules, this week’s module price stayed flat. Related vendors indicate that if upstream prices continue to rise, makers will have to transfer cost to the client end – whether or not they will be successful depends on the future development of the market.