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Polysilicon:

Polysilicon prices have remained stable throughout the week. The mainstream concluded price for mono recharge polysilicon is RMB 83/KG, while mono dense polysilicon is priced at RMB 81/KG and N-type polysilicon is currently priced at RMB 93/KG.

On the supply side, some of the production capacity that was impacted by the accident has been restored, and the growth rate of new capacity has accelerated. As a result, this month’s actual output has seen a significant increase, marking the first time the growth rate has hit double digits. This has led to a substantial shift in the supply and demand dynamics of polysilicon.

On the demand side, specialized crystal pulling manufacturers have reduced their activation rates, exerting pressure on upstream polysilicon manufacturers. These crystal pulling manufacturers are currently focusing on depleting their accumulated polysilicon inventory.

Consequently, the forecast of a decline in polysilicon prices in the upstream segment is on the verge of becoming a reality, and crystal pulling manufacturers, in general, are delaying their procurement demands. Furthermore, the marginal increase in polysilicon is expected by the end of this month, while crystal pulling manufacturers still have sufficient inventory to consume throughout the month.

Meanwhile, the market prices of downstream cells and modules continue to remain below their production costs, and the negative signs of declining polysilicon prices are increasingly apparent. This week, the turnover of polysilicon has been slow, with prices holding steady. However, certain events, such as some second-tier polysilicon enterprises reducing their prices for N-type polysilicon, indicate that a downward trend in polysilicon prices is looming.

Wafer:

The prices of wafer have still reduced throughout the week. The mainstream concluded price for M10 wafer is RMB 2.78/Pc, while G12 wafer is priced at RMB 3.80/Pc.
On the supply side, currently, the inventory of wafer enterprises stands in the range of 2.4-2.6 billion pieces. Their production schedules and inventory for this month significantly surpass downstream demand. Consequently, wafer manufacturers face immense pressure to deplete their inventory. Specialized wafer manufacturers are clearly indicating their intention to reduce production, with some of them having already commenced this step to manage their inventory.

On the demand side, there hasn’t been a notable increase in cell procurement demand. Nevertheless, owing to diminishing profits and mounting inventory pressure, some professional cell manufacturers are contemplating reducing their production. This week, wafer prices have uniformly dropped, maintaining a price gap of approximately 0.1 yuan per watt between leading and smaller manufacturers. With dwindling downstream purchasing demand and limited cost support from the upstream segment, it’s anticipated that wafer prices will persistently decline, making it challenging to arrest this downward trend.

Cell:

Cell prices have still declined slightly this week. The mainstream concluded price for M10 cell is RMB 0.60/W, while G12 cell is priced at RMB 0.66/W. The price of M10 mono TOPCon cell is RMB 0.65/W.

On the supply side, cell manufacturers did not plan to reduce their production before the long weekend, leading to an increase in overall inventory. Currently, cell market prices are hovering close to production costs. Some specialized cell manufacturers are now contemplating reducing production and focusing on depleting their existing inventory.

On the demand side, the operational rates of specialized module manufacturers have not improved, and cell prices have not reached their lowest point. Downstream consumers have adopted a bearish stance, and their purchasing strategies involve buying products with increasing prices rather than those with declining prices. Consequently, they are postponing their purchasing demands. Assessing specific cell models, the inventory of P-type modules in the downstream segment is high, and the demand for domestic centralized projects remains stagnant. As a result, there is insufficient momentum for module manufacturers to improve their production scheduling, and the demand for P-type cells is weak.

When it comes to N-type cells, there is a substantial difference in demand between high-efficiency and low-efficiency cells. The supply of low to medium efficiency cells has increased significantly, but the market’s receptiveness to them is low. Consequently, their inventory is growing, whereas the demand for high-efficiency N-type cells remains positive. However, in the latter half of the year, most orders are for P-type cells, which creates increased shipment pressure even for high-efficiency N-type cells.

This week, cell prices have been erratic, but overall, they are declining. There is currently no support from the cost side, and with weak customer demand, there is still room for further reductions in cell prices.

Modules:

Module prices have declined slightly throughout the week. The mainstream concluded price for 182mm facial mono PERC module is RMB 1.20/W, 210mm facial mono PERC module is priced at RMB 1.21/W, 182mm bifacial glass PERC module at RMB 1.21/W, and 210mm bifacial glass PERC module at RMB 1.22/W.

On the supply side, the shipment volumes of module manufacturers have exhibited significant divergence. The market price for modules has dropped even below the production costs for specialized module manufacturers, prompting them to drastically reduce their production. Despite weak current demand, top-tier leading manufacturers are maintaining high operational rates and are even undercutting prices to secure more orders, squeezing the market share of smaller manufacturers.

On the demand side, overseas inventory levels are elevated, and as module prices continue to decrease, customers are closely monitoring market dynamics. Furthermore, there are rumors that the European Union may impose trade barriers to support local photovoltaic manufacturers. This has instilled panic among module manufacturers, who are likely to reduce module prices to clear their inventory.

Stimulated by the commencement of ground projects, domestic demand for modules has improved. However, industry chain prices are still on a downward trajectory, and domestic customers are increasingly concerned about further price declines. Given that current module inventory can still meet short-term delivery demands, the demand for modules from domestic manufacturers is not expected to surge in the short run. This week, module prices declined, with G12 P-type modules dropping by 1.63% and M10 P-type cells falling by 0.83%. However, the downward trend persists, and there is still room for further price declines.

During the first half of 2023, the polysilicon industry experienced expansion in production capacity, resulting in an oversupply of polysilicon and a subsequent downward trend in the entire industry chain prices. However, by the end of June, the prices of polysilicon reached a near-bottom point, and both polysilicon and wafer prices stabilized, leading to a significant increase in customer demand.

Polysilicon: In the first half of 2023, the polysilicon market witnessed fluctuating prices, starting with an initial rise followed by a subsequent decline, and an underlying issue of oversupply persisted into the second half of the year.

In early January, the expansion of polysilicon production capacity coincided with weakened demand as the year-end approached, leading to a significant decline in prices. By mid-January, the polysilicon prices fell below the cost line for polysilicon enterprises. In response, leading enterprises refrained from selling polysilicon at such low prices, causing a price rebound. As February began, the operation rate of wafer production significantly increased, leading to higher procurement demands for polysilicon and consequently a sharp rise in its prices. However, by the middle of the month, most polysilicon orders for the month had been signed, dampening the stimulus for further price increases. In March, the pressure of excess inventory prompted some polysilicon enterprises to cut prices to facilitate higher shipments, resulting in a slow reduction of prices. Moving into April, the overall supply of polysilicon remained abundant, and with strong willingness among silicon enterprises to sell, prices continued to decline gradually. May witnessed a further increase in polysilicon output, causing a faster decline in prices due to inventory accumulation and pressure from crystal pulling activities. As June approached, the market faced the release of additional production capacity and a considerable accumulation of inventory. This led to polysilicon prices nearly reaching the cost line as market demand fell short of expectations. In response, some enterprises opted for temporary shutdowns, overhauls, and delayed production to reduce inventory pressure. Moreover, increased procurement volumes from crystal pulling plants helped stabilize prices temporarily.

In July, the polysilicon inventory levels experienced a decline compared to the previous period due to increased downstream demand, leading to price stabilization. However, there remains a possibility of a slight price rebound. Projections indicate that in the third quarter, polysilicon prices might rebound to more than RMB 80/KG. The second half of 2023 is expected to witness a peak in photovoltaic demand, and the current price levels within the industry chain can help stimulate this demand. However, the third quarter will also see the concentration of new production capacity from several polysilicon manufacturers entering the market. As a result, the oversupply of polysilicon is unlikely to be significantly altered. While there may be a chance for prices to rebound, both the timing and extent of such a rebound are expected to be very limited.

Monthly price trend of Polysilicon Unit: RMB/KG

Wafer: In the first half of 2023, wafer prices experienced fluctuations with an initial rise followed by a decline. As the second half of 2023 approaches, the wafer prices still face a potential downside risk.

In mid-January, downstream pullback was observed in wafer prices due to increased cost pressures and inventory consumption among polysilicon enterprises. However, early February witnessed a surge in downstream procurement demand, resulting in a slight shortage of polysilicon supply and subsequently leading to sharp price increases for wafers. By later February, the wafer market saw stability as the supply tightened due to the influence of crucible quality, leading to a decline in cell procurement speed. In early March, the supply of high-purity quartz sand remained tight, restricting overall wafer output. The rising wafer costs and limited supply provided support for a slight price increase. As April arrived, the arrival of imported sand eased the tight supply of quartz sand, leading to an increase in wafer production. However, subdued downstream demand resulted in a slight price decline. In May, to avoid losses caused by falling prices, cell companies showed reduced willingness to procure wafers, leading to an accumulation of wafer inventory. The rapid decline in polysilicon prices further contributed to a sharp drop in wafer prices. In early June, wafer enterprises responded by reducing production and cutting prices to address inventory concerns. However, the oversupply situation persisted, and with upstream silicon prices experiencing a significant decline, wafer prices followed suit and declined sharply. Towards the end of June, wafer inventory gradually rebounded to a more reasonable level, and the decline range of polysilicon prices narrowed down. As a result, cell enterprises displayed increased willingness to purchase, leading to wafer prices ceasing further declines first.

In July, there is an expected increase in the output of cell modules, and upstream polysilicon prices have stabilized. However, during this period, there are rumors of India potentially banning the export of quartz sand. Although manufacturers have confirmed that it is merely a rumor, it has still caused some short-term nervousness in the market. Consequently, wafer prices have shown slight signs of rebounding. Nevertheless, based on the current statistics from TrendForce, the effective capacity or output of wafers in a single month remains significantly higher than that of downstream cell and modules. Even if there is an explosive demand for wafers in the second half of the year, there is still a substantial amount of new production capacity waiting to be released. As a result, the market continues to face an oversupply situation, and there remains a considerable risk of declining wafer prices later on.

Monthly price trend of wafer Unit: RMB/Pcs

Cell: In the first half of 2023, cell prices experienced sharp fluctuations, with N-type cells maintaining a premium advantage.

In mid to late January, there was a significant increase in polysilicon and wafer prices, prompting cell prices to rise accordingly. Early February saw a surge in module production scheduling, driving up the demand for cells and supporting their rising costs, leading to further price increases. However, by mid and late February, the interplay between module inventory and pricing resulted in slight declines in cell prices. In March, cost pressures prompted cell enterprises to consider raising prices. However, the high inventory levels and resistance from downstream module companies, unable to sell at higher prices, led to price stability. Towards the end of the month, increased demand for G12 cells caused prices to rise slightly. Moving into April, the overall supply and demand for cells achieved a better balance, resulting in generally stable prices. G12 cells, due to tight supply and demand, commanded significantly higher prices compared to M10 cells. However, May saw a sharp decline in upstream polysilicon and wafer prices. Additionally, downstream module companies exerted pressure to reduce prices, leading to a rapid decline in cell prices. In June, as upstream raw material prices were approaching their bottom, cell prices continued their downward trend. Towards the end of the month, the stabilization of polysilicon and wafer prices, coupled with increased downstream purchasing demand, resulted in a narrower range of cell price declines.

Upstream polysilicon and wafer prices have stabilized, providing a favorable environment for the market. Furthermore, the surge in customer demand has led to a significant month-on-month increase in module production scheduling for July, which is expected to provide strong support for cell prices. If downstream demand surpasses expectations or experiences an early explosion, there is a potential opportunity for cell prices to rebound in the future market. Throughout the first half of 2023, the production capacity of N-type cells fell short of expectations, but the robust customer demand created a structural shortage of N-type products in the market. This resulted in a price gap between N-type and P-type cells. However, in the third quarter, manufacturers are gradually increasing N-type production capacity, which should alleviate the intense supply constraints of N-type products. Yet, this might further stimulate explosive demand for N-type products among customers.

Monthly price trend of cells Unit: RMB/W

Module: In the first half of 2023, overall module prices experienced fluctuations and showed a downward trend. However, expectations for the second half of 2023 are optimistic, as customer demand is anticipated to explode.

In early January, as customer projects reached their end stages, there was a gradual decrease in procurement demand. The sharp decline in upstream raw material prices impacted the modules sector, leading to price fluctuations. In February, with customer projects not yet scaling up and market demand increment falling short of expectations, module prices remained relatively stable. Come early March, customer purchasing was not active, and stable cell prices contributed to the overall stability of module prices. Towards the middle and end of the month, there was an uptick in overseas demand, but cost pressures persisted, keeping module prices stable. Throughout April, module prices continued to remain stable as costs remained unchanged. However, early May saw temporary falls in upstream polysilicon, wafer, and cell prices, which did not immediately affect module prices, allowing them to maintain stability. Nonetheless, by mid-May, the impact of the declining industry chain prices started affecting modules, leading to lower-than-expected customer demand and a significant decline in module prices. In June, although polysilicon and wafer prices gradually stopped falling, customer demand had not yet surged on a large scale, leading to a continued downward trend in module prices. In some instances, module prices even dropped below RMB 1.2/W.

Currently, module prices are experiencing irregular fluctuations, but overall, they have reached the lowest level in recent years. As upstream prices have started stabilizing, it is expected that module prices will soon follow suit, stabilizing at around RMB 1.3-1.4/W. This price point can act as a stimulus for a quick pickup in market demand. In the domestic market, positive signals of increasing demand are evident. Large-size base projects have already commenced construction, and the country has issued the second batch of project lists, with preparations underway. Additionally, plans for the third batch of projects are in progress, and the centralized market is expected to witness an explosion in demand. For the main overseas market, Europe’s inventory has reduced after a period of consumption, but the grid consumption issue has posed a challenge for demand revitalization. However, with the arrival of summer, Europe is expected to face peak electricity consumption, presenting a new opportunity for demand pickup in the region.

Regarding the U.S. market, being a high-value overseas market, it plays a crucial role for various leading module companies in their sales strategies. However, policy fluctuations in the U.S. market have always been a concern for both the supply and demand sides. The Middle East market has been notably active this year, with recent signings of large-scale sales frameworks and cooperation announcements on the manufacturing side. As a result, this market holds considerable potential for future growth and is worth close attention.
Monthly price trend of module Unit: RMB/W

In the first half of 2023, there was a continuous release of polysilicon production capacity, leading to intensified dynamics between the upstream and downstream industry chains, resulting in price fluctuations. Looking ahead to the second half of 2023, the situation of excess supply of polysilicon is anticipated to persist, making it challenging to bring about significant changes. Consequently, any potential price rebound is expected to be limited in both timing and extent. The wafer market remains oversupplied, presenting a downside risk to prices. On the other hand, the cell market is experiencing gradual release of N-type cell production capacity, with expectations of an explosive demand for N-type products. As for modules, both domestic and overseas demands for installed capacity are projected to improve, indicating a positive turn in the market outlook for the latter half of 2023.

TrendForce’s latest research indicates that, as production cuts to DRAM and NAND Flash have not kept pace with weakening demand, the ASP of some products is expected to decline further in 2Q23. DRAM prices are projected to fall 13~18%; NAND Flash is expected to fall between 8~13%.

DRAM Spot Market

In the spot market, the trajectory of prices of DDR5 chips is going to be a highlight in the short term. Some sellers are now willing to lower quotes on DDR5 products that have been enjoying price hikes for many consecutive days. However, there have been few to no actual transactions, so TrendForce will continue to closely monitor changes in the prices of these products. As for spot prices of DDR3 and DDR4 products, they are still on a downward trajectory with no sign of easing. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 1.33% from US$1.575 last week to US$1.554 this week.

NAND Flash Spot Market
Suppliers continue to enlarge in production cuts. Despite the insignificant increase in spot market demand, the continuously shrinking output of small-capacity wafers, as well as the attempt at price revitalization among a number of suppliers, have pulled up demand and transactions of low-priced inventory within the spot market, which led to a small price increment. However, mainstream wafer prices have yet to suspend in decline. 512Gb TLC wafer has dropped by 0.21% this week, arriving at US$1.427.

YMTC has officially notified a 3~5% price increase for NAND Flash in mid-May. However, the initial impact of the price hike is expected to be felt in the enterprise market, and it may take some time to reflect in the consumer spot market.

The semiconductor industry is in the midst of a correction period aimed at tackling inventory challenges, and the memory sector is feeling the impact. Major players in global memory manufacturing, including Samsung, SK Hynix, Micron, and YMTC, have recently disclosed substantial cuts in CAPEX, ranging from 45~50% starting from 4Q22. The most recent financial reports from Micron and Samsung further underscore the industry’s downward trend.

TrendForce highlights that YMTC’s decision to raise prices comes amidst market conditions marked by substantial oversupply in the second quarter. Despite Samsung’s efforts to curtail production, the positive effects of this reduction are not anticipated to materialize until the latter part of the year. Consequently, experts predict a more substantial decline in contract prices for the second quarter of 2023 than initially expected.

The market situation in 2Q23 is still oversupplied, leading to further price declines. Since October of last year, the market transaction price for wafers has been lower than the supplier’s cash cost due to selling pressure. Some suppliers used the opportunity when Samsung announced production cuts to raise the wafer price, which is likely why YMTC made this announcement. TrendForce predicts that as demand gradually recovers in the second half of the year, wafer prices will become more resilient. (Photo credit: YMTC LinkedIn)