Of the total global demand of 105.5GW, the mono-Si market witnessed significant growth of market shares in 2017. Judging from the total shipment of mono and multi-Si wafers, the shares of mono-Si wafers increased from 19% in 2016 to 27% in 2017. Since the capacities of both mono and multi-Si wafers have increased substantially this year, their pricing strategies will affect the product market share. The shares of mono-Si products may rise to 35-40% this year. On the other hand, owing to the significant growth of mono-Si market share, Longi topped the charts in terms of Chinese shipment, with outstanding performance.
Three Major Drivers of Mono-Si Products:
(1) Capacities of Longi and Zhonghuan increased rapidly in 2H17
The mono-Si wafer capacity has reached 27GW for Longi and Zhonghuan at the end of 2017, surpassing GCL’s multi-Si wafer capacity. However, GCL will not have many expansion plans this year. As Longi and Zhonghuan will push up the total capacity to more than 50GW at the end of this year, the mono-Si wafer market will no longer be in short supply like last year but witnesses oversupply. As a result, despite the continuously increasing market shares of mono-Si products this year, mono-Si wafer prices and gross margins will shrink substantially.
(2) Commercialization of PERC technology
PERC capacity growth has doubled in recent years, reaching 7.7GW, 15GW, and 32.6GW in 2015, 2016, and 2017, respectively. The growth of PERC capacity focused on mono-Si products in 2017 and PERC has almost become a standard process for mono-Si products in 2018. Meanwhile, the multi-Si wafer market has switched to diamond wire (DW) slicing to reduce costs and use wet-etching black silicon to increase efficiencies. As the wet-etching method more matures, multi-Si cell manufacturers will start to implement the PERC technology on the wet-etching multi-Si cell this year.
(3) China’s domestic market share for mono-Si products is much higher than other countries
Aside from the fact that many ground-mounted projects use mono-Si products in 2017; the biggest change of Chinese local demand lies in an installation of over 4GW for the “Top Runner Program” and the explosive growth of distributed generation (DG) projects. These factors pushed up the mono-Si market shares in China. According to our collection and calculation, the share of mono-Si products reached 36% in Chinese local market last year, and is likely to increase further in 2018 following the higher targets of the “Top Runner Program”
It is expected that Jinko Solar’s shipment reached 9.8GW in 2017, topping the charts for global modules. Following was Trina, Canadian Solar, JA Solar, and Hanwha Q-Cells. Hanwha Q-Cells that was particularly left behind started to catch up, with the shipment becoming similar to JA Solar that ranked fourth. In addition, the shipment of the top ten global manufacturers were reach 58GW in 2017, accounting for 55% of the global market share.
Different from the global rankings, the module shipment rankings obviously reshuffled in China. Stimulated by the significant growth of mono-Si market shares in China, Longi that ships most of its products to China has changed places with Jinko Solar and moved up to No.1. Following was Trina, Jinko Solar, GCL-Si, JA Solar, Suntech, Risen Energy, Canadian Solar, Yingli Solar, and Talesun. These companies supplied 29.2GW of modules to China in 2017, representing 57% of the total Chinese local demand.
Looking ahead for 2018, Chinese local demand may decline this year for the first time, putting pressures on the PV supply chain prices. Although top-tier manufacturers for each sector of the supply chain will continue to expand capacities this year to win more market shares, the control over the profitability of the company is a bigger challenge than the market share growth.
The polysilicon market will not release many new capacities in 1H18, leading to stable average trading prices in the first half of the year. This sector is still the sector with the best profit of the entire supply chain.
For wafers, the mono-Si wafer capacity will continue to increase every quarter. As multi-Si wafer manufacturers switch from slurry to DW slicing, the multi-Si wafer capacity will also increase significantly. Yet, confronted by high polysilicon and low cell prices, both the mono and multi-Si wafer markets will face great challenges in profitability this year.
Cell is the sector that already witnessed tight profits in 2017. Since this sector expanded less compared to other sectors this year, the profit decline is likely to be limited. However, many leading and new cell companies are still planning for GW-scale expansions, and therefore this year will be the first year for the cell sector to begin eliminating high-cost capacities.
For modules, both global and Chinese demands are expecting to shrink this year, but top-tier vertically-integrated companies continue to increase their capacities and shipments, trying to win more market shares. Consequently, second/third-tier module manufacturers are likely to receive fewer OEM orders compared to last year.
Overall, apart from the uncertainties brought by the US “Section 201” case and India’s safeguard measures, the market condition has slowly become clear in other markets. And forecast for the 2018 demand in China: Demand will possibly be between 40 to 50 GW, decrease slightly compared to 2017. At the same time, utility power plants, poverty alleviation power plants, and ground-mount DG systems are remain subject to the June 30th 2018 deadline. For Top Runner Program, the deadline is December 30th.
The first quarter seems to be possibly the weakest quarter in 2018 since the demand from the main markets, China and US, are dwindling, and is mainly supported by the Indian and Japanese markets. The distribution of peak and off-peak season this year is similar to last year. Demand will drop first and then rebound in 2018Q2. As the Lunar New Year approaches, the PV industry start cool down currently, while supply chain prices decline rapidly at the same time. Companies should be prepared ahead of time for the upcoming 0630 installation boom and another off-peak season in 2H18. Technology optimization and strategic adjustment are still the top priorities.
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