Silicon materials prices remain high, photovoltaic companies have solutions

PhotovoltaicSilicon materialPrices remained high. The latest weekly report on the price of the photovoltaic industry supply chain released by the industry consulting agency TrendForce on September 7 showed that the highest price of single crystal re-invested materials in China reached 311,000 yuan/ton, the lowest price was 303,000 yuan/ton, and the average price was about 307,000 yuan/ton. The highest price of single crystal dense material is 309,000 yuan/ton, the lowest price is 299,000 yuan/ton, and the average price is about 304,000 yuan/ton. This means that the current price of silicon materials is higher than more than 10 years ago!

In the past two years, the price of photovoltaic supply chain has continued to rise. Affected by this, the cost of silicon wafers, battery cells and components is under pressure and the prices are also operating at a high level. "In the context of continuous fluctuations in the price of photovoltaic supply chain, component manufacturing companies feel pressured. It is no exaggeration to say that the first thing employees of component manufacturing companies do when they wake up every day is to see the changes in the price of silicon materials." Recently, Zhang Zhongliang, general manager of Shandong Runma Solar Energy Technology Co., Ltd., said at the TUV Rheinland's 2022 "Quality Better China Photovoltaic Ceremony".

The production expansion cycle varies greatly in each link

Since July 2020, domestic silicon material prices have been rising due to tightening supply. At that time, the average price of single crystal dense materials in China was about 60,000 yuan/ton, and now it has soared to about 300,000 yuan/ton, an increase of as high as 400%. PVInfoLink, a third-party market research firm, pointed out that although it can be predicted that the overall effective supply of silicon materials will increase in September based on the current situation, it may still be difficult to fundamentally improve supply and demand conditions. In the short term, the capacity for starting the crystal pulling process will still be restricted by the supply of raw materials.

Zhang Hai, general manager of Jinzhou Sunshine Energy Co., Ltd., pointed out that in recent years, the photovoltaic industry has been in a stage of rapid development. Whether it is market demand, new installed capacity scale, or capacity expansion, it has maintained a high annual growth rate. However, due to the different production expansion cycles in each link of the industrial chain, ranging from several months, six months, to one or two years, there is a possibility of mismatch in the expansion of production in the entire industrial chain. Therefore, supply and demand imbalance occurs at a certain point in time or at a certain link.

Xu Weizhi, chief technology officer and general manager of technical R&D management of Zhengtai New Energy Technology Co., Ltd., agreed with the above views. In his opinion, the problem of supply and demand imbalance in the photovoltaic industry chain has always existed. The cycle of new production capacity of silicon material companies is about 18 months, while the expansion cycle of battery cells is about half a year, and the newly expanded production capacity will be quickly digested by the downstream.

Price hedging reduces cost pressure

At present, the soaring price of silicon materials has affected the prices of silicon wafers, battery cells, modules, and even terminal demand in the subsequent links of the photovoltaic supply chain. Huang Haiyan, vice president of Zhengtai New Energy Technology Co., Ltd., said that maintaining a high level of silicon material prices will have a certain impact on the entire industry. For example, some projects have been postponed. In response, companies are actively responding to this.

"Although the price of silicon materials has been rising this year, the prices of other auxiliary materials, including photovoltaic glass, have shown a downward trend to varying degrees, and the prices of the two have achieved a certain degree of hedging, which has actually alleviated the pressure brought by the soaring price of silicon materials to enterprises." Zhang Zhongliang said, "Companies are working hard to ensure the safety and stability of the supply chain, as well as the rationality of costs and prices through incoming materials processing, dual distribution and other methods."

At the same time, the rise in silicon material prices has also forced companies to speed up technology updates and iterations. "Silicon materials, as the main raw material, account for a high proportion of the cost of photovoltaic modules. With the increase in the price of silicon materials, their proportion in costs is also increasing. If the use of silicon materials can be used to reduce the amount of silicon materials, the purpose of reducing costs can be achieved. This is also one of the reasons why the overall increase in the industry's technological innovation speed this year." Huang Haiyan introduced, "Since this year, the scale of expansion of new technologies such as TOPcon and heterojunction has increased significantly. Our TOPcon products have achieved large-scale mass production, and at the same time have also increased some new technology reserves."

Vertical integrationLayout guarantee

The increase in silicon material prices essentially reflects supply and demand issues. In order to ensure normal materials and materials, the company has taken a series of measures, such as maintaining cooperation with good upstream and downstream customer relationships, signing long-term purchase orders to lock in materials in advance, etc. Some companies have chosen to vertically integrate the entire industrial chain layout to reduce adverse effects.

Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, recently pointed out that photovoltaic companies have a strong willingness to expand their production capacity and are also affected by the development trend of vertical integration of the industry. "Under the integration strategy, photovoltaic companies will consider which link they have insufficient or no capacity, and then expand production in this link and gradually improve the industrial chain."

"We have invested in the polysilicon company Qinghai Lihao, and as its shareholder, we have implemented strategic cooperation with many silicon wafer suppliers. Battery chips, modules and downstream power station businesses have always been areas we have deeply rooted in. These have provided impetus for us to ensure the safety and stability of the supply chain." Xu Weizhi said.

In Zhang Zhongliang's view, whether it is choosing professional development or vertical integrated development, enterprises must have their own plans, and the most important thing is to find a differentiated business model that suits their own characteristics.

"At this stage, the price of silicon material remains high, but this is only a phased problem. The industry expects that this situation will not last for too long. After the new silicon material production capacity is released one after another in the fourth quarter of this year or next year, the price of silicon material may enter a downward channel, bringing good news to the industry." Zhang Hai believes.