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© begemot 30 dreamstime.com Analysis | January 28, 2016

PV demand remains strong in 1Q16

The general outlook for the 2016 PV market has become more certain as China, the U.S. and the U.K. finalize their respective subsidy policies.
“China plans to connect the country’s PV power plants onto the grid before the middle of the year,” said Corrine Lin, analyst for EnergyTrend, a division of TrendForce. “Therefore, major manufacturers of multi-Si wafers, cells and modules will be running at full capacity during the first quarter.”

A major silver powder plant owned by DOWA Hightech had an accident in early January. This event is currently the only variable that could affect the PV supply chain since DOWA Hightech is the leading supplier of silver powder for conductive paste. Cell manufacturers will have difficulty maintaining their high capacity utilization if the silver powder plant does not return to full operation soon.

In the U.S. market, the extension of the solar Investment Tax Credit (ITC) has dampened the industry’s anticipation of an installation rush in the second half of 2016. Lin expects the worldwide boom in PV demand to wind down after the Chinese New Year holidays. Presently, prices across supply chain are almost at their highest and will have difficulty to move up any further.

Decline in polysilicon prices starts to moderate; multi-Si wafers and cells are nearing their peaks

The latest reporting from EnergyTrend reveals oversupply and Chinese trade barriers have caused polysilicon prices to drop sharply this month despite the unusually warm demand. The Chinese polysilicon market remains in a slump with the average dealing price arriving around RMB 104~106/kg. However, most Chinese polysilicon manufacturers and their downstream clients have kept their inventory levels under control to approximately two weeks to a month. While the decline of polysilicon prices will persist, the trend will start to moderate.

The multi-Si wafer market are seeing prices go up rapidly this month on account of demand outstripping supply. On the whole, the capacity increases undertaken by multi-Si wafer manufacturers during 2015 were the most conservative compared with capacity increases in other segments of the PV supply chain. However, TrendForce estimates that there will still be an additional 5GW added to overall multi-Si wafer capacity in 2016. The tight supply situation is therefore expected to get some relief in the near future, and multi-Si wafer prices will peak in February.

The mono-Si wafer market by contrast is experiencing a severe supply glut. According to EnergyTrend, demand for mono-Si products totaled around 9.5GW in 2015, but the entire mono-Si wafer capacity exceeded 15GW for the same year. Moreover, Longi, Zhonghuan and GCL will be expanding their mono-Si capacities over this year. Hence, there will be no relief to the mono-Si oversupply problem in the short term. Mono-Si wafer prices have been kept at US$0.89/pc in the recent period, but later they will fall gradually.

The significant rise in multi-Si wafer prices has not fully reflected in this month’s cell prices, which have only increased slightly. Another factor that is constraining the cell prices is the outlook of the module market at the turn of the year. Installation peak seasons for the U.K., Japan and India have just passed, so module demand and prices in general are expected to weaken. Excluding the possibility of a conductive paste shortage, cell prices will likely peak around the Chinese New Year holidays.

Though first- and second-tier module manufacturers have lately benefitted from the installation rush in China and Japan and reported high capacity utilization, module prices in overseas markets (outside China) have begun their descent. Module orders from major regional markets are also at their highest and are unlikely to rise any further. Module prices are currently maintained in the range of RMB 3.9~4.05/W and will drop a bit after the Chinese New Year holidays.
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More information can be found at Trendforce.

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