China Solar Prices Stay Under Pressure With Weekly Drop In Wafer Prices

Production cuts and efforts to coordinate price action among key manufacturers failed to work as silicon solar wafer prices suffered their sharpest weekly fall in China this past week. The drops mean that the eventual prices of modules will continue to be under pressure for now, despite repeated urging by top industry players in China for an arrest in the decline, and some price recovery. Most of the leading players have reported sharp profit drops due to the low prices. Polysilicon prices, the basis starting block for solar production, have also been under pressure as reported earlier. China’s share of the solar supply chain remains close to 80% currently.

The average transaction price for N-type G12 monocrystalline silicon wafers fell to CNY1.35 (US 19 cents) per piece, marking a 7.5 percent drop from the previous week—according to data released by the relevant branch of the China Nonferrous Metals Industry Association on May 8.

The drops mark a new low for wafers, which have a serious impact on both upstream and downstream solar costs.  Analysts are attributing the drops to declining demand, as Chinese manufacturers grapple with high inventories, intense competition and tariff barriers in volume markets like North America and India.  With tariffs blunting the impact of lower Chinese prices in these markets, developers don;t really have much to look forward to other than the hope that prices won’t go up at least, even as local manufacturers will see a further  improvement in margins in due course. India for instance   imports almost all of its wafer requirements from China.

The big hope for Chinese players will be the draw down of high inventories in Europe during this quarter finally, which had slowed down shipping to the continent as well. But the medium term outlook for a significant price recovery remains uncertain as even China’s own demand is not expected to rise as strongly as seen in the past two years.
Industry efforts to form an OPEC like cartel of solar manufacturing have also moved slowly, influenced perhaps by China’s desire to be seen as a fair competitor on the global stage in the face of the Trump tariffs barrage.