During middle Q1-2022, several unpredicted events disrupted international business at different scale: the Russian Invasion to Ukraine, Natural Gas Crisis in Europe, Zero COVID-19 policy in China and international logistics cargo delays. Those matters have significantly affected widespread number of industries including the PV module chain. From raw materials production, terrestrial and sea cargo transport have been influencing the tendencies during the 2nd quarter of 2022. Furthermore, Q2 is characterized by a different level of entropy compared with 2021 and with price increases for the whole PV industry supplies.
Eco Green Energy prepared a short price increase for PV modules report based on current raw material prices, freight cargo and RMB/USD rate to get up-to-date about what to expect during the second half of this quarter (May-June 2022).
1. Raw materials price increase for PV modules
According to EnergyTrend price quotation, during last week polysilicon had carried on with a small inflation with average price of RMB 254/kg.
Some polysilicon manufacturers have already started to accept orders for this month. The polysilicon Some polysilicon manufacturers have already started to accept orders for this month. The polysilicon market is currently restricted in supply due to strict health control for cargo movement by Zero Covid Policy. From one side, it is because hardly to get raw material for polysilicon, while another reason is delayed arrival time due to the pandemic. A segment of sporadic and urgent orders have been conclu-ded with high prices, which have somehow elevated the prices of polysilicon.
Wafer cost has also slightly risen this week. Prices for wafers have been not stable recently, particularly for M10 (182mm) and G12 (210mm) sizes at a respective mainstream concluded price of roughly RMB 6.78/pc and RMB 9.05/pc. Moreover, prices for Multi-Si wafers continued to climb, slowly reaching RMB 2.45/pc. Demand for those wafers types is currently stable: it can be proved by only a small amount of Multi-Si bought at a high price. The overall operating rate of the wafer segment is currently at about 70-80%.
Another situation with cells this week: compared to previous data, the price for this material is stable. The cost for M6 left the same RMB1.12/W/ US$0.16/W without a rise compared to previous data. Furthermore, the quotations for M10 and G12 mono PERC cells remain the same: RMB1.175/W and RMB1.17/W respectively.
The order intensity for cells preserves no different, though the demand for mono-Si M6 wafers is relatively lethargic with apparent fluctuations in concluded prices. On the contrary, M10 and G12 are provided with sufficient price support thanks to their thriving demand.
1.4 Module price
Considering price growth for polysilicon and wafers, there no price increase for PV modules, including Mono-Si 166, 182, and 210 modules sitting at a respective mainstream concluded price of approximately RMB 1.87/W, RMB 1.9/W, and RMB 1.92/W. Due to current strict health regulations, transportation remains limited for diverse range of industries of world’s largest supplier: China. It’s been reported delays in the supply chain from raw materials, components, and ultimately to delivery of assembled modules. Several module makers are forced to lower their operating rates due to affected production plans.
Otherwise, overseas markets continue to supply their robust demand: European and Latin American regions continue to increase in demand and order inquiries, and price bargaining will gradually clear up alongside the increase of polysilicon capacity and mitigation of the pandemic.
In terms of glass, prices continue to be stable without any growth. 3.2mm and 2.0mm glass is now under approximately RMB 28/㎡ and 21/㎡. Actually, glass demand remains robust, with no apparent fluctuations in quotations, and the restricted transportation in partial regions has resulted in sluggish transactions. However, this situation is constantly evolving due disruptions in the raw material chain.
2. Freight Cost
The freight price for the Q1 and Q2 of 2022 is lower compared to last year. Currently, the cost tends to marginal fall due to the epidemic control in China, as traffic blockades have led to a drop purchases in European, African, and Asian countries. At least the price on the 29th of April reached $8,955, while on the 6th of May – $8,787. Need to consider the fact as soon as China reopens, the freight cost will rapidly grow because of urgent and numerous orders.
3. RMB/USD Exchange Rate Dynamics affects price increase for PV Modules
Bloomberg stated during late April, the yuan has tumbled by about 3% this month as the U.S. dollar strengthened. Prolonged Covid controls and worries about Chinese economic growth might fall to 4.60% have also weakened sentiment on the yuan. Shanghai and Shenzhen stock indexes plunged in their worst day since Feb. 3, 2020, in the early days of the pandemic’s initial shock.
Reuters reported the dollar rose to 101.86, a level it last tested in March 2020. It was last at 101.76, up 0.7%, its largest daily percentage gain since March 11. In parallel, the euro had slight gains after France elections with the single currency down 0.9% at $1.0717, against a resurgent dollar. While China’s yuan fell to a one-year low against the dollar and was last down 0.9% at 6.5615 yuan per U.S. dollar.
Several customers are expecting the volatility of dollar might be in their favor, however due the constantly evolving cost factors hereby indicated, we strongly advice that the net effect on their upcoming orders might be with high tendency to raise if the order decision isn’t make on time.
To sum up, Eco Green Energy suggests considering all the facts about the price increase and placing the orders in May. Despite the price slight increase for polysilicon and wafers, cost for glass, cells, and freight are stable. However, this tendency cannot be warranted to last long. Due a potential bubble-style disruption might occur due the current panorama and the situation is constantly evolving.
Along diverse Commerce Chambers located in Shanghai, this situation will not remain longer: as soon as China re-open its cities, it is possible to expect sharp price rise. We suggest do not to hesitate to confirm your orders as soon as possible to avoid unnecessary cost for your business.
Please note that Eco Green Energy will provide prices based on the current situation. We will not cancel or postpone the shipment.
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- EnergyTrend,2022, Solar price – https://www.energytrend.com/solar-price.html
- EnergyTrend, 2022, https://www.energytrend.com/pricequotes/20220425-27947.html
- TrendForce: The Price Report of PV Industry Supply Chain (4/13~4/20) https://www.energytrend.com/pricequotes/20220425-27947.html
- FREIGHTOS DATA, 2022 – https://fbx.freightos.com/
- Reuters, 2022 U.S. dollar rises to two-year high; yuan tumbles reuters.com/business/finance/euro-inches-up-after-macrons-victory-gains-against-bruised-sterling-2022-04-25/
- CNBC, 2022 China’s central bank steps in to slow its rapidly weakening currency, as yuan hits one-year lows https://www.cnbc.com/2022/04/27/china-economy-central-bank-tries-to-slow-weakening-yuan-vs-us-dollar.html
- Bloomberg,2022 China’s Sudden Currency Plunge Raises Risk of a 2015-Style Panic https://www.bloomberg.com/news/articles/2022-04-28/china-s-sudden-currency-plunge-raises-risk-of-a-2015-style-panic