Large Volumes of Taiwanese B-Class Solar Wafers Enter China

Source : Lily Shen -Solarzoom

In last few days, reports emerged about cheap imported solar wafers from Taiwan entering Mainland China. Lily Shen from Solarzoom described one Taiwanese manufacturer selling its poly-c-Si wafers at $0.80 per piece.  After adding a third party trader's fee the cost is around $6.9 Yuan. Another trader is quoting a cost of 6.5 Yuan/piece using wafers from another Taiwan based producer.  Thanks to price advantages, the circulation of those products is beginning to rise and with it the concern of domestic manufacturers, particularly those belonging to a tier 2 or tier 3. The main reason for this condition is average wafer efficiency, which is higher in Taiwan than in Mainland.

For example, SAS poly silicon wafer can reach 17.6% efficiency with a narrow deviation; a high efficiency product by one of the leading Chinese wafer makers may have as good efficiency rating but has uneven level of conversion among all wafers due some impurity, and in some cases may contain wafers which are difficult to process due to their physical characteristics, example of being too thin to handle by cell processing lines.  While processing costs are lower in China for various reasons, certainly production of quality “stable” wafers increases costs. It is important to state that instability in achieving uniformed product quality is found mostly in smaller enterprises or may be seen in old production lines for larger enterprises.  Premium producers like ReneSola Ltd. (NYSE: SOL) are above domestic averages and match those of GET and SAS.

Traditionally Taiwanese imports come through port of Hong Kong; this is also a place where products not meeting standards and regulations would be also inspected. The port was on high security alert during recent elections. Safety concerns had increased customs’ efforts to conduct systematic inspections but slowed down the processing.  In addition some importers reported deposits being collected on solar products. Combination of both created a backlog of Taiwanese B-class wafers entering the country. Since elections are over and the illegitimate practice of collecting levies has been restrained those volumes are being released. Normally they would be absorbed quickly, but the large influx is causing concern to manufacturers watching ASPs.

Current wafer pricing for tier one is around 7.4 Yuan per piece, with tier two quoting 7.2 Yuan.  If the volume of Taiwanese wafers was to increase selling at 7.1 Yuan/pc, manufacturers will be forced to lower the price again, to keep their product in the range ensuring competitiveness.

Taiwanese wafer manufacturers produce their wafers specifically to customer expectations. Since the B-wafers are “out of the quality”, to save time and effort, they use wholesale traders to sell them in China. While B-wafers normally hold the same efficiency levels as A-class wafer, they have physical appearance flaws, which make them not suitable for customers. At the same time they can compete effectively with the A-class Chinese product.  Traders will reclassify and repack them for the domestic market as the A-class and since they are made in Taiwan, being known for the quality they are popular with the buyers. Even the C- class wafers undercut the domestic B-Class wafers. Those are quoted at 6 Yuan per piece but Taiwanese competition is offering them at 5.5 to 5.8 Yuan per piece range.