Recently, the polysilicon market has faced expectations of production cuts, with an estimated reduction of about 10,000 tons in November, primarily from companies in Sichuan and Xinjiang. In December, an additional reduction of 20,000 tons may occur, potentially bringing the industry's total production down to 900,000 tons. Despite these anticipated cuts, polysilicon inventories remain high at around 250,000-260,000 tons, with leading manufacturers holding approximately 100,000 tons, and inventory distribution being uneven.
In terms of pricing, although the market expects production cuts to tighten supply, prices may experience a slight decline, with leading companies' contract prices projected to stabilize between RMB 39 and RMB 40 per kilogram. This outlook reflects the complex market assessment of supply-demand dynamics and the restraining effect of inventory pressure on prices.
Silicon Wafer Market: Production Cuts and Price Stability
For silicon wafers, October production was expected to reach 46-47 GW but may decrease to 43-44 GW in November due to production cuts. Currently, prices for 183mm wafers remain stable at RMB 1 per piece, while 210mm wafers are at RMB 1.2 per piece. Wafer inventories have dropped over 10% from their peak, now standing at 4.4-4.5 billion pieces, indicating a gradual market absorption of stockpiles.
The stability in wafer prices is supported by production cuts among several companies, which helps alleviate oversupply pressure and supports price stabilization.
Changes in the Cell and Module Markets
In the cell market, October production was around 49-50 GW, with November expected to remain steady. Inventory levels have dropped from a high of 20 days, reflecting a recovery in market demand. Increased downstream module demand is likely to support wafer and cell prices.
In the module market, recent quotes have seen a slight increase of 0.01 to 0.03 RMB per watt, although the price for bulk deliveries remains steady around RMB 0.61 per watt. October module production reached 51.9 GW, a slight month-over-month decline, but the decrease in cell demand signals an ongoing destocking trend in the industry. In November, most companies' production plans show a slight decrease, although some leading companies plan to expand capacity, with a total planned production of 51 GW, down 0.9 GW.
Policy Adjustments and Supply-Side Reform
On the policy side, the photovoltaic (PV) industry is discussing supply-side reform measures aimed at stabilizing prices and supporting leading companies. The primary approaches being considered for production cuts are quota restrictions and energy consumption limitations, but no specific plans have been finalized. Unlike the 2021 policy adjustments, this round may be more cautious, aiming to avoid excessive profit concentration in polysilicon companies and to benefit each segment of the supply chain.
Additionally, the discussions suggest a future inclination towards specialization rather than integration, meaning the industry may increasingly focus on innovation and cost control within specific areas to boost overall competitiveness.
Prospects and Impacts of Granular Silicon Technology
Granular silicon, while unlikely to fully replace rod silicon in the short term, holds an advantage in energy efficiency, giving it a high market share when the industry is broadly unprofitable. In the context of supply-side reform, granular silicon companies hold a favorable position due to this low energy consumption advantage, though the specific impacts of production cut policies on them remain uncertain.
Supply and Demand Shifts in the PV Industry and Policy Impact
Domestic PV installation demand is expected to decrease from 230-240 GW this year to 220 GW next year, with a projected 8% drop in distributed installations. However, global installation demand is expected to remain stable, growing from 449 GW this year to 450-460 GW next year.
The survival of second- and third-tier cell and module companies is challenging, with many halting production or resorting to outsourcing. Policy adjustments remain crucial to allow the industry to clear excess capacity. A reasonable price for polysilicon is expected to be above RMB 50 per kilogram to ensure that other segments maintain full-cost coverage, with the breakeven costs for polysilicon at approximately RMB 46-47 per kilogram and for wafers at RMB 1.25-1.3 per piece, with a cost floor of RMB 1.2-1.23 per piece.
Cost Analysis of PV Components
Across the PV supply chain, the costs for wafers, cells, and modules vary. Leading manufacturers exhibit clear cost advantages in non-standard costs for wafers, cells, and modules. For instance, non-standard wafer costs for leading manufacturers are approximately RMB 0.048-0.05 per watt, while the industry average is around RMB 0.053-0.055 per watt; for cells, leading manufacturers' non-standard costs are approximately RMB 0.165 per watt, versus an industry average of RMB 0.175 per watt; and for modules, leading manufacturers' non-standard costs are approximately RMB 0.35 per watt, with the industry average at RMB 0.43 per watt.
Conclusion
In summary, the PV industry faces a complex environment of market dynamics and policy adjustments. Companies need to closely monitor market developments and policy changes to develop appropriate production plans and market strategies. At the same time, government should enhance policy guidance and regulatory efforts to promote the industry's healthy and sustainable development.
Source：https://mp.weixin.qq.com/s/axv-9_jnkmuAtTiiab5wNA
