Rush order influx continues, market outlook optimistic for 1Q12

TAIWAN: As rush orders from Europe, North America, and China continue streaming in, the 1Q12 global solar market outlook has become more optimistic. EnergyTrend research indicates, as downstream orders flooded in, related vendors continued to receive orders and negotiate prices during the Chinese New Year vacation period.

Even now, after the holiday period has ended, vendors’ product lines are at loaded capacity. The influx of rush orders that initially was expected to be a short-lived phenomenon is now certain to continue until the end of 1Q12, which has made related vendors more optimistic towards first quarter operations.Source: EnergyTrend, Taiwan.

With regards to the supply side, related vendors believe the rapid price plummeting in 2011 separated the strong from the weak. According to EnergyTrend, the withdrawal of many small to mid-sized makers from the supply chain in 4Q as well as the downward adjustment of capacity by major makers ameliorated the oversupply situation to some extent.

Furthermore, the quick rise in high-efficiency product demand also caused the gradual withdrawal of makers with inadequate technology from the mainstream market, which will help end unfavorable industry price slashing.

While details of German and British subsidy cuts in 2012 remain unclear, the German subsidy policy is expected to be set in 2Q12. Therefore, system vendors will rush to increase installation volume before the next subsidy cut, which will help keep 1Q12 demand stable.

According to EnergyTrend, Germany may adjust FIT subsidies on a monthly basis to prevent the subsidy cut induced installation wave such as that which occurred in December 2011. Whether or not total installation volume will be restricted or not is still in discussion, but related vendors are indicate that such a policy would be unlikely to pass this year.

Overall, EnergyTrend believes suitable adjustments will benefit stable development of the German solar market, and demand changes this year are not expected to be large. Since there is also uncertainty about the UK’s FIT policy, currently installed systems may receive benefits based on the old FiT, which would result in strong demand for the UK market.

As for this week’s spot prices, due to the influx of orders, makers have begun pulling inventory and spot prices continue to increase. According to EnergyTrend research, currently lowest polysilicon price has increased to $26/kg, while average price increased to nearly $28/kg, currently at $27.96/kg, a 0.3 percent increase.

Silicon wafers have also seen a price increase, with lowest multi-Si wafer price at $1.1/piece and average price arriving at $1.17/piece, a 1.3 percent increase. The price range for mono-Si wafer deals stayed the same, but average price increased slightly to $1.583/piece, an increase of 1.41 percent.

EnergyTrend believes the majority of orders are from the European market. With rooftop installations accounting for a large portion of orders, high-efficiency product price is now starting at $1.2/piece, a 3 percent increase compared to before Chinese New Year. Related vendors indicate, with the rising demand for high-efficiency products, related product price will continue to increase in 1Q12 due to limited capacity.

As for solar cells, this week’s average price still showed a slight uptrend with average conclude transaction price at $0.516/Watt, a 0.39 percent increase. This week’s solar module price also increased slightly, with average price at $0.852/Watt. Related vendors indicate, the current order status will last throughout 1Q12, and some vendors are already negotiating April orders, displaying conservative optimism towards demand for this quarter.