Two leading Chinese manufacturers have said that the spiraling prices of raw materials like glass, polysilicon, and silver since the second half of 2020 have led to a sharp increase in the prices of solar modules.

Supply constraints could continue until the second half of this year, and the current prices of modules were the best that can be projected for the next six months, or even longer, the two companies said in separate statements.

Overall solar module cost has gone up 35% since the second half of 2020 due to spiraling raw material prices, Chinese solar module supplier LONGi has said.

Between June 2020 and February 2021, glass prices surged by around 80% per square meter. Prices for polysilicon and silver also shot up by 64% and 55%, respectively. Silver is mainly used in manufacturing silver paste for solar cell metallization.

“Overall module cost has increased about 35% and has remained high, due to the sharp price increases in these raw materials,” LONGi said in a statement.

Modules make up 55-60% of project CAPEX in a highly competitive market like India. While acknowledging that independent power producers have thin margins, LONGi said that raw material prices are driven by many factors which are not in control of OEMs (original equipment manufacturers) like LONGi.

Meanwhile, freight rates had also increased substantially due to a shortage of shipping capacity because of Covid-19 regulations for the crew, pushing up module prices further. “It is a difficult situation and beyond any of our control,” the company said.

“Our clients, which are leading IPPs in India and worldwide, are fully aware of the price increases in raw materials and freight cost. It is a difficult situation and beyond any of our control. In this scenario, LONGi and our partners mutually renegotiated the price terms in supply contracts to ensure on-time project completion. We are happy to announce that we have been able to successfully fulfill almost all our clients’ orders and made deliveries on time,” said Dennis She, Senior Vice President, LONGi Solar.

Separately, another Chinese module supplier, JinkoSolar, said that the fresh surge in downstream demand had driven the polysilicon shortage to crisis levels.

The global vice president at JinkoSolar, Dany Qian, said that polysilicon prices are not expected to drop for at least six months. The company’s general manager for South & Central Asia, Daniel Liu, stated that Jinko is not backing out from any of the signed deals with its Indian customers due to the raw material supply shortage and the rising prices. The company has had record shipments to India in 2020 and Q1-2021!

The rise in polysilicon prices and the shortage of the raw material has forced panel suppliers to slow down production. “The price and supply situation has been steadily worsening since last year,” it said.

According to Jinko, some forecasts say that these supply issues could continue until the second half of the year or even later because Q4 is traditionally the peak season in China for project commissioning.

“It is evident that polysilicon shortage is here to stay for a while. There are no signs of its supply catching up anytime soon. Furthermore, this will cross over to the whole ecosystem, and it is expected that silver and copper will also see upward price trends. Industry experts and analysts following this situation very closely have concluded that price projections that we are getting today are probably the best and the lowest in the next six-month timeframe or even longer,” the company said.

Source: Mercom India