Solarzoom Forecasts Q1, Solar Market Prices to Increase

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The demand in Q1 is expected mainly to come from Japan, the EU and China. We expect the demand for Chinese modules from the EU will drop to 1.5-2GW, because European demand is decreasing and because the risk of an announcement from the AD&CVD case against the Chinese solar products is getting higher in Q1.

In Japan, the FIT is expected to decrease by Q2; therefore, the market is expected to receive rushed demand during Q1 and demand from Japan for Chinese modules is expected to be about 0.4-0.6MW.

Local demand from China is separated into three parts: the delayed installation of west power stations, the delayed installation of the first batch of the Golden Sun project, and the order from the second batch of Golden Sun project. The demand from China is about 1.5-2GW.

Global demand for Chinese modules, including the rest of the world, is expected to be in the vicinity of 4-4.5GW.

The calculated demand for polysilicon is 20,000-23,000MT. At present, the usable local supply capacity of polysilicon in Q1 is 22,000MT. Since the polysilicon stock has been low, the market expects price improvements due to the result of China’s AD&CVD preliminary determination coming in next month. In the present situation, because the information had leaked out in the middle of last month, the downstream manufacturers have already prepared the polysilicon stocks permitted by availability of their cash flows. According to the data from Solarzoom market center, the largest inventory is about three months and the average polysilicon stock of the whole downstream manufacturers is about two to three weeks. Demand is expected to increase before the expected publication of findings is to take place at the end of February.

For the wafer manufacturers, the purchasing cost is getting high; but, because they have some cheaper polysilicon inventory, part of the wafer manufacturers choose to monitor the market for the time being and not to increase the price. According to the Solarzoom Market Center, the quotation price of polysilicon has improved 13% from the beginning of 2013, and the trading price also had an 8% improvement. But, wafer saw only a 2% improvement during the same period. At present, the processing cost of poly-c-Si wafer is about 50% of the total wafer cost, and that of mono is 65%. The price for solar wafers is yet to see improvement as a result of the polysilicon increase.

For the cell, this wave of price improvement is based on the market demand. Except for the order from the second batch of the Golden Sun, most of the delivery time is between Jan. and Feb. The supply ability of cell manufacturers is being constricted, so the cell manufacturers have started to quote at a higher price, especially for the mono 125 cell. We haven’t seen a significant improvement in trading prices for cells, but the payment arrangements have been more acceptable compared with the last few months. Because of the low inventory and the market demand increase, we expect trading prices will rise during the next two weeks.

Although this improvement mainly resulted from the upstream cost raise and the downstream demand, there is still not too much influence on the module price in the short term. Because the orders are received so long in advance, the price has been determined, and the module sellers need to clean their stock and orders for a while before there is pressure to raise their price. Until this week, we have observed some first-tier module manufacturers raise their quotation, but since there is not much difference between their modules and what is available on the market, the overseas customers are able to spend some time looking for quotes from other sellers and then make a decision. We haven’t seen a successful increase in trading prices, but we expect this situation will be changed by next week at the earliest, or before the Chinese New year at the latest. After that, there should be an actual price improvement across the market.

Tier-one companies include the U.S. and HK stock market-listed entities, with large capacity and product circulation in the market, like Suntech Power Holdings Co., Ltd. (ADR) (NYSE:STP), Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE: YGE), Canadian Solar Inc. (NASDAQ: CSIQ), Trina Solar Limited (NYSE: TSL), JA Solar Holdings Co., Ltd. (ADR) (NASDAQ: JASO) and ReneSola Ltd. (ADR) (NYSE: SOL).