Trade decisions dampen industry growth
Market analyst TrendForce is expecting prices to drop slowing down the global market recovery. After the United States announced its preliminary determination on the CVD and AD duty, the momentum in the market has turned weak rapidly. Module and cell manufacturers were the first to be challenged by the decreased capacity and increased inventory. In order to reduce operating pressure, PV cell and module makers hope to stimulate the market through price adjustment. Thus, price quotes declined significantly, which led to upstream wafer and polysilicon price adjustment as well.
"Wafer makers are currently facing a difficult situation in which they have to try to fulfill the contracts requested by polysilicon makers while meeting the price-cutting demands from downstream clients," said Arthur Hsu, research manager of EnergyTrend, a subsidiary of Taiwan-based market intelligence firm TrendForce. Wafer prices have been adjusted since August and may decline further in the future. High-efficiency wafer price quotes for first-tier manufacturers were US$0.9-0.92/piece and US$0.86-0.88/piece for second-tier manufacturers, indicated by EnergyTrend's database.
On the other hand, Taiwanese wafer manufacturers have actively increased their OEM ratio to fill the unused capacity caused by the weak demand. In the meantime, wafer prices have started to be below manufacturers' break-even point. "The break-even point was at US$0.54/piece for first-tier makers and around US$0.56/piece for second-tier makers. Certain OEM quotation even approached US$0.5/piece, down 10% compared to the break-even point. It will bring substantial impact to makers' profits if they continue to raise OEM ratio. Yet, the high raw material costs caused manufacturing costs to remain high. That's why wafer manufacturers can't adjust prices according to market changes," added Hsu.
The industry is optimistic about 2H14 as demand in China and Japan will increase significantly. It's estimated that more orders will be placed in 4Q14, and hence rumour has it that polysilicon manufacturers may revise the contract prices upward to US$24-25/kg. But since no compromise has been reached yet for both buyers and sellers, prices within the contract market may continue to be divergent in the short run.
Due to the excess inventory, market prices continued to drop. Polysilicon prices declined 0.09% to US$20.399/kg. High-efficiency multi-si wafer prices came to US$0.925/piece, down 2.63% and that for normal-grade dropped 2.26% to US$0.907/piece. Mono-si wafer prices fluctuated and declined 0.77% to US$1.166/piece. For cells, overall market demand remained weak. Pressured by high level of inventory, Taiwan's cell prices came to US$0.334/watt, down 1.45%. Chinese manufacturers' cell prices dropped 0.6% to US$0.329/watt due to weak Chinese demand.
