Price Volatility in PolySilicon Prices Likely To Complicate Matters In India

Recent price volatility in polysilicon prices, caused first by a fire at a giant GCL facility in China, followed by the closure of a major plant owned by Tongwei, is likely to lead to some serious heartburn in India too. While full details of the damage caused by the fire at the GCL facility are yet to come out, the closure of Tongwei’s 20,000 tonne plant at Sichuan is expected to end anytime, lending some hope for a return to some normalcy. The interesting ting here is that demand has still not picked up to pre-covid levels yet, so there should be some slack in the market yet to absorb the sudden disruptions.

For now, short to medium term projections of a continued price drop in modules and cell imports from China have been belied. The only saving grace has been the relative strength of the rupee in the past three months.

Key bids in India in the past two months have been won by developers counting on continued low prices or even a further drop, and any spike beyond 2-5 percent in these rates will not be tolerable for them. Add to that the delay in signing of PPA’s with SECI, in turn hamstrung by the reluctance of discoms to sign up for PSA’s. and you have a situation building up for yet another cycle of project delays, disputes, and even cancellations.

Some developers might already be reconsidering  their plans and winning bids, and perhaps even looking far more keenly for an exit route already, if the situation does not improve, both in terms of domestic progress on paperwork, as well as global module and cell prices.

The warning of a bidder who had lost out during the record low auction where the Rs 2.36 /kwh bid was discovered seems to be coming true all too early. ” We believe at that at these prices the risk of the smallest disruption pushing the project to unviable levels is too high, that is why we could not consider a price lower than this bid price”. From a firm that apparently entered a bid at around Rs 2.45 /kwh.

On the other hand, the corporate affairs head of another developer we spoke to was more sanguine. “Between signing of PPA’s and actual ordering of material, there is still enough time to hope for more stability to return. Lets face it, the global markets do not exist for India  today, as we have slowed down way too much for a lot of players. They need to see stable prices for all markets to grow today”.

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