Since the last year, polysilicon has steadily been becoming costlier, initially due to manufacturing facility shutdowns brought on by the pandemic, and more recently because of a strong surge in demand. Firms like Jinko Solar, have rushed to pre-empt criticism and position themselves vis a vis smaller competitor, even pointing out the risks of placing orders with smaller, players that depend on other manufacturers for key inputs. While prices of key metals like Silver, or even solar glass have caused their share of issues, it is polysilicon supply and prices that have been the biggest factor in prices rising.
Market research company Energy Trend reports that the most recent polysilicon rate of RMB135/kg (INR 1557/ kg) is up 3.3% on last month’s price, while analysts expect the price might get to RMB150/kg (INR 1730/kg) imminently. The increasing cost of raw materials led to the rise in module prices, in turn bringing down module sales. Some Tier 2 module manufacturers cut cell orders as a result, only to find themselves at the back of procurement queues when they have subsequently moved to re-order when the market rebounded.
The worst hit by pricing imbalances is the non-vertically integrated module manufacturers since they rely on wafer and cell manufacturers who are fighting polysilicon price spikes. Although new polysilicon capacity is expected to come onstream later this year, with facilities to be owned and operated by companies like Xinte, GCL-Poly, etc, supply is unlikely to improve till September or beyond. Add to that the surge in prices for key materials like silver and copper, and suddenly turning a profit has become a challenge for many manufacturers. Some have responded by canceling or going back on orders accepted, willing to take to the hit on reputation and financials.
For larger majors like Longi and JinkoSolar, it has even meant absorbing some losses. Jinko, in its full-year 2020 financial results and 2021 guidance disclosure last week warned of a drop in demand from rising prices. “Since the fourth quarter of 2020, the mismatch between supply and demand continued to drive volatility upstream and downstream. We predict this scenario will continue into the second quarter of this year,” said Xiande Li, chairman of the board of directors at JinkoSolar. The firm also made a loss in its fourth quarter, despite record shipments.
In addition to polysilicon, solar glass prices also rose last year due to increased demand and caused major solar glass manufacturers to accrue record profits. But with new capacity and furnaces coming onstream later this year, prices are expected to normalize.
Source: Saur Energy