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Section 201 Drives Up Global Supply Chain Prices, Price Gap Begins to Emerge between China and Overseas

Ever since SolarWorld Europe filed for bankruptcy, there has been a vacancy for some high-efficiency modules in the US and European markets. Starting from May, inquiries for non-Chinese high-efficiency modules have increased significantly. Later, affected by the “Section 201”, the US market has started to see stronger demand and higher module prices.

Such strong demand not just let overseas manufacturers to not have to worry about their order statuses for Q3, it also allowed China and Taiwan to keep witnessing strong demand even after June 30th. The market will have three main focuses in Q3:

(1) Strong US demand in Q3 caused by the possible MIP execution of “Section 201” in late-2017

Aside from the US, European, and Korean manufacturers that have put a lot of efforts in the US market, capacities from Southeast Asia are mostly shipping to the US too after Q3, leading to high prices. Taiwan manufacturers may also enter the battlefield as the 2014 anti-dumping and countervailing duties will be lowered in late-August.

(2) The European market that is about to enter peak-selling season

After SolarWorld Europe filed for insolvency, local manufacturers have been the first to be benefited from it. Yet, since Europe has been the region with higher prices in the world, prices didn’t fluctuate significantly despite the tight capacities.

(3) Other markets

Although Chinese demand has support from the “Top Runner Program” and distributed generation (DG) projects in Q3, demand for utility-scale power plants will continually end in July, resulting in substantial decline of local demand. Fortunately, the emerging markets like the Middle East and South America have witnessed increasing demand this year, and thus the capacity utilization rates shouldn’t be too low for top-tier Chinese manufacturers.

To conclude all of the above, the “Section 201” sets off a very different situation compare to last year. For the overseas capacities, manufacturers originally anticipated that Q3 would be the quarter with the weakest demand this year but turned out to be the best selling season. A price gap starts to show between Chinese and overseas products:

Polysilicon

The average trading price of polysilicon has stayed flat in China, reaching RMB 120-122/kg for top-tier manufacturers and RMB 118-119/kg for small-scale manufacturers. But spot prices have begun to show signs of declining. Meanwhile, overseas polysilicon prices have slightly increased as overseas wafer prices went up.

Wafer

The price trend for Chinese multi-Si wafers won’t be confirmed until leading manufacturers come up with the price quote. Yet, since Chinese cell prices have already peaked, it may be difficult for multi-Si wafer prices to rise further. On the other hand, due to the low utilization rates in Taiwan, the Taiwanese market faced the most intense moment for multi-Si wafers this year, with the spot price rising to US$ 0.64/piece. It’s expected that the tight supply will continue and thus prices will increase further.

Leading mono-Si wafer makers’ compromises on the prices have been revealed in mid-June. The price of 180um mono-Si wafers was lowered RMB 0.2 to RMB 5.85/piece, while that of 190um was lowered RMB 0.15 to RMB 6/piece. Under such significant decline in wafer prices, the mono-Si cell market with more stable price trend will earn more profits. (The market still mainly focuses on 190um wafers. If converting into the US dollars, 180um was lowered US$ 0.026 to US$ 0.76/piece and 190um was lowered US$ 0.02 to US$ 0.78/piece.

The larger decline of 180um also shows mono-Si wafer makers’ determinations to promote thin silicon wafers.

Cell

Because certain power plants have postponed the construction to July, the multi-Si cell market will temporarily not suffer from price decline in China, reaching RMB 1.8/W in late-June. But the situation is entirely different in Taiwan. Affected by the “Section 201”, the overseas capacities that are tax-free all went to the US market. The demand vacancy in the European market will be fulfilled by Taiwanese makers. Therefore, the average trading price of Taiwanese cells has increased to US$ 0.23/W and may rise further.

Module

For modules, in order to rush the production for the installation boom before June 30th, the average trading price of Chinese modules has reached RMB 2.9-3.1/W for multi-Si and more than RMB 3.2/W for mono-Si. The biggest change is the non-US market. In order to avoid the risks brought by the “Section 201”, the US has started to purchase modules and get the projects started ahead of time, leading to short supply and full order status for the overseas module makers in 3Q. Not just the price of conventional modules has increased from US$ 0.34-0.35/W originally to US$ 0.37-0.38/W, the mono-Si PERC module market also witnesses supply shortage.

Anyhow, it doesn’t matter what the final decision for the “Section 201” is, what can be seen is that the supply chain prices in Q3 this year will be better than expected. Prices in the US market will rise further in the short run due to the short supply of modules

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