Electronics Production | August 16, 2012
EnergyTrend: Manufacturers demanded to execute contracts
Manufacturer utilization rates have been on a decline as the market remained in slump, which in turn affects their inclination to carry out the contracts with suppliers.
According to EnergyTrend, the green energy research division of TrendForce, recently cell makers’ utilization rates ranged between 50% and 70%, with some stronger companies utilization rates reaching 70%-80%. Due to the stagnant outlook, companies failing to acquire more orders chose to postpone carrying out their contracts. However, suppliers seem to start losing patience and putting more pressure on their clients. According to EnergyTrend, given the long-standing partnership between manufacturers and suppliers, in the past the latter seldom took it to the court when the market suffered from downturn; suppliers usually just managed to find the middle ground – despite the gap between the contract price and the spot price, both parties could still find a way to make the closing price closer to the spot price, allowing the manufacturers to cut down costs. However, the situation starts to change lately – on account of the bleak market outlook and weakened demand, orders from downstream companies significantly decrease. In addition, with the prices continuing sliding and coming close to suppliers’ variable costs, suppliers can no longer afford to meet their clients’ price expectations in exchange of contract execution. Related companies noted they have received legal attest letters from their suppliers demanding the contracts to be executed. According to EnergyTrend, certain manufacturers were forced to forfeit their down payment. Whether or not suppliers will take legal action against their manufacturers remains to be seen. This week’s spot prices saw a less steep decline as the prices have plummeted to or below suppliers’ variable costs. Nonetheless, considering the lack of growth momentum and manufacturers’ conservative attitude, EnergyTrend sees possibility of a further dip in prices. Affected by the fact that suppliers began demanding manufacturers to carry out contracts and the sluggish market demand, Polysilicon ASP slid to $20.557/kg, a 0.24% decrease. It is not clear if the downtrend will affect the spot market as well. As for silicon wafers, the fact that certain Chinese manufacturers did not receive any orders and that the inventory digestion went on saw multi-Si wafer spot prices plunge further with ASP dropping to $1.039/piece, a 0.1% decrease. Nonetheless, high-efficiency products’ prices remained 5%-10% higher than those of standard products. As for mono-Si wafers, ASP went down to $1.375/piece, a 2.00% decrease, as makers have been proactively digesting products with conversion efficiencies between 18%-18.3%. As for solar cells and modules, demand and prices remained flat; module ASP dropped by 0.14% to $0.735/Watt. As for thin films, with the murky outlook and limited room for price negotiations, ASP fell by 1.72% to $0.686/Watt.
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