Ministry of Commerce of People’s Republic of China (MOFCOM) recently announced that there were subsidies to the US polysilicon under investigation which led to substantive damages toward China’s domestic industry Thus, countervailing duty of 65% has been imposed on two of the US manufacturers, Hemlock and AE Polysilicon According to EnergyTrend, a research division of TrendForce, most of the Chinese polysilicon manufacturers have resumed production, which will increase polysilicon capacity Hence, the anti-subsidy duty will have limited impact on price as price is not likely to increase in the future
As Indicated by EnergyTrend’s investigation, the annual growth rate for Chinese imports of US polysilicon was about 85% in 2012 In addition, based on the data announced by MOFCOM, the amount of the imported polysilicon that is subsidized by the US government has continued to go upward It increased by almost 100% in the first half of 2012 compared to the same period in 2011 Judging from the demand of Chinese solar-grade polysilicon in 2012, the proportion of imports from the US accounted for more than 20%
EnergyTrend believes that the anti-subsidy duty will have limited impact on polysilicon market price Since China has announced the anti-dumping tariff before, the tax rate imposed on US manufacturers have reached 533%-57% In another word, the market price has already been affected at that time Moreover, the anti-subsidy duty is far less than the tax rate mentioned above Therefore, market price is not likely to fluctuate significantly this time On the other hand, due to the less damage towards the Korean manufacturer, OCI, and European manufacturers throughout the polysilicon anti-dumping investigation, Chinese manufacturers have turned to European and Korean manufacturers for purchase Yet, Chinese polysilicon manufacturers still face tough challenges from the worldwide competition
The rising of the Chinese domestic market causes polysilicon price in China to gradually increase, which also allows Chinese polysilicon manufacturers to resume production For example, TBEA’s capacity of 12 thousand tons will be mass produced by the end of the year; CSG has resumed production this August after eleven months of delay on polysilicon production; and Sinosico has also aggressively worked on production re-activation EnergyTrend believes that it’s not likely for polysilicon price to continue increasing due to the falling downstream market prices and the Chinese manufacturers’ resumed production, which will lead to flexible supply in the future
Judging from spot market’s overall performance, Chinese polysilicon price remains between RMB132/kg-RMB135/kg Affected by the result of countervailing duty, buyers have requested certain manufacturers to lower the price, which causes this week’s average price to reach US$16975/kg, a 006% drop For silicon wafers and cells, this week’s price remains steady For modules, the competition between USA and Japan is intense The price continues to drop with this week’s price reaching US$0674/Watt, a 044% drop
According to DRAMeXchange, a research division of TrendForce, the fire accident experienced by SK Hynix's Wuxi plant has led to a sudden surge in market demand The spot market prices for mainstream PC DRAM 2Gb chips have soared by a whopping 36% since the day of the fire (the calculation is based on the chip's agreed price of $US 218 on 9/24) A growth of at least 10%, it is worth noting, is also expected for the soon-to-be-announced September contract prices Given that SK Hynix was originally the supplier with the highest market share in the graphics memory market (leading both Samsung and Micron), a major shortage in graphics DRAM (for instance, DDR3x16, GDDR3, and GDDR5) has inevitably occurred The Taiwanese companies with noticeable, though much lower, shares in this market include Nanya and Winbond
Graphic memories have, since the very beginning, belonged to a niche market, with price movements that generally correlate strongly with those of PC DRAM Given that their supplies had traditionally always remained steady, a habit has never really been developed on the part of many manufacturers to maintain a "safety" inventory level for their graphics-based memory products In the periods following the Wuxi plant fire accident as well as the heightened uncertainty in the supply side, SK Hynix's ability to meet its supply schedules has clearly become restricted This has immediately caused the market prices of graphics memory to fluctuate and, later, prompted relevant manufacturers with no more than one month's worth of inventory to scout for other supply sources (some of these graphic chip makers include notable companies such as nVIDIA and AMD)
According to TrendForce, the price for the most popular memory product (DDR3 4Gb 256Mx16 1866/2133MHz) has already managed to rise by 20% since the 9/4 fire accident to approximately US$ 395 It would not be unreasonable, in the following periods, to expect the said price growth to eventually surpass that of PC DRAM With regard to the high end GDDR5 2Gb chips, given that the number of suppliers are getting increasingly lower, the official prices have exceeded US$ 38
TrendForce believes SK Hynix's fire incident will impact the entire DRAM industry significantly Other than the prices for PC DRAM (which has been soaring ever since the fire accident) and the supplies of graphics memory components, the prices of products such as server DRAM and specialty DRAM are also likely to be affected Sources with familiar knowledge of semiconductor plants have already indicated that the recovery period for the Wuxi plant would take as long as three months to half a year Thus, from 4Q13 to 1Q14, the market supplies are expected to remain tight
Regular inspections have been conducted on the No4 reactor at the Oi nuclear power plant However, delay on the inspections has once again led to Japan’s “zero nuclear power” status Since nuclear power is still the major source of base-load electricity while other units are still applying for re-activation, it’s estimated that it will take at least half a year to complete security inspection According to EnergyTrend, a research division of TrendForce, the “zero nuclear power” state will force Japan to accelerate the development of renewable energy Among all, demand from solar energy is likely to go upward The total amount of grid-connected installation may reach 7GW in 2013, which will triple the installation amount last year
According to the data collected by the Federation of Electric Power Companies of Japan (FEPC), Japan’s base-load electricity mainly focuses on Hydropower (inflow type) and nuclear power Coal-fired and gas-fired power would belong to medium-load electricity and Fuel oil and other energies would be categorized in peak-load electricity Ever since the Fukushima nuclear disaster, most of the nuclear power plants have been suspended, which has lowered the usage of nuclear power from 33% in 2010 to 215% in 2012 The power shortage caused by the decline of nuclear power has been filled by thermal power generation According to the statistical data, the top ten power companies have significantly increased the usage of thermal power generation from 5905% in 2010 to 8982% in 2012, which caused Japan to import large quantities of coal, oil, natural gas and other fuels
Japan's top ten power generation scale comparison chart
Source: EnergyTrend
Besides, from power supply and demand aspect, Japan’s supply and demand ratio has remained at around 105 in the past three years However, based on the total amount of power generated in 2010, the supply and demand ratio has dropped to 0753 after deducting the amount of nuclear power generated In order to solve the insufficient power supply problems caused by the suspension of nuclear power plant after 2011, increasing the usage of renewable energy has become another solution for the Japanese government and manufacturers, aside from the solution to adopt more thermal power generation
As indicated by relevant data, power companies have continued to purchase more power generated from wind and solar energy According to the data, Japan’s top ten power companies have purchased much more power generated from solar energy since 2008 The annual growth rate increased from 925% in 2008 to 4589% in 2011 As for wind energy, although the annual growth rate has been fluctuating, power purchased by power companies has also continued to increase On the other hand, according to EnergyTrend’s statistics, the amount of grid-connected installations in Japan has continued to increase In addition, it will take at least half a year for nuclear power plants to meet the security check request and re-activation safety requirements and it would be difficult to project the time needed to receive the re-activation approval from the local government, thus demand in the Japanese market have obviously gone upward this year
Estimation of Japan’s Amount of Grid-Connected Installation in 2013
Source: EnergyTrend3Q13 Gold-Member Report
Judging from spot market’s overall performance, Chinese polysilicon price remained between RMB130/kg-RMB140/kg Since average price slightly dropped to the range of RMB132/kg-RMB135/kg, last week’s average price came to US$16985/kg, a 009% drop For silicon wafers, both buyers and sellers are still bargaining over the price Some manufacturers indicate that they are still hoping to revise price upward but it will have to depend on future market condition Last week’s silicon wafer price remained flat For cells, demand in September was 20%-30% higher than that in August Moreover, with the increased Japanese orders, cell price for Taiwan’s first-tier manufacturers slightly increased again with last week’s average price reaching US$0391/Watt, a 026% rise For modules, last week’s average price remained steady
According to DRAMeXchange, a research division of TrendForce, the market penetration rate for USB 30 flash drives may only be 10% in 2013, which is weaker than expected Even though the size of the USB 30 flash drive market has yet to expand, a number of controller IC manufacturers are already starting to hasten their research developments and investments This is among the reasons why the ROI for USB 30 products fell short of expectations, and why leading manufacturers may soon emerge within the market
In 2Q13, the USB 30 flash drive shipments reached 5-6 million units (the same as the previous quarter), whereas market penetration rate ended up at only 5% (see Figure-1) The unimpressive sales can mostly be attributed to the tightened NAND Flash supplies, the not-yet-refined controller IC solutions for USB 30 flash drives, poor PC sales, and the intensified price wars among the major USB 20 flash drive manufacturers
Despite the possibility of an improved NAND Flash supply situation in 2H13 and the upcoming release of the cost-efficient Crystal Free USB 30 Controller IC, the persistence of the USB 20 price competition and pressures of declining NAND Flash prices are expected to put a noticeable strain on USB 30 flash drive sales In Q4, the USB 30 flash drive penetration rate is likely to only grow slightly to 10-15%
TrendForce projects that the 2013 USB 30 flash drive market penetration rate will increase from 2012’s 3-4% and arrive at somewhere around 10% As more and more leading manufacturers begin releasing USB 30 products into the market, the penetration rate is likely to approach 20-25% in 2014
The UFD module manufacturers have, for a long time, longed to see the price difference between USB 30 and USB 20 products reduced In order for this to happen, controller IC manufacturers need to not only be able to offer the aforementioned Crystal Free solution, but also begin migrating to the more advanced manufacturing technologies and increase their products' compatibility with different NAND Flash components To attain these goals properly, the investment in technological and human resources will undoubtedly need to be greater now than it has ever been during the USB 20 era However, given that the size of the USB 30 flash drive market has not been expanding as expected and that it has become increasingly more difficult for the investment efficiency of USB 30 controller IC to support the cost of developing next gen products, more and more manufacturers are beginning to face increased pressure on the business end
The controller IC solutions developed by Innostor, Phison, and Silicon Motion are currently the choices favored by most UFD manufacturers These three companies currently have a combined market share of 85-90%Due to the persistent draining of their financial resources, the uncertainties within the market, and the aforementioned three manufacturers’ continuous promotion of their USB 30 Crystal Free solutions, an increasing number of vendors have begun to contemplate steering away from the controller IC market, while only a few are believed to be capable of competing effectively Taking into account the aforementioned development, TrendForce believes the USB 30 controller IC market will soon end up being in a similar state as the market in the USB 20 era That is, only 5 to 6 major vendors are likely to be supplying the major controller IC products
Due to the EU-China trade wars and the rising of Asian markets, PV manufacutrers have started to re-adjust their strategic plans According to an investigation regarding PV manufacturers’ total shipments and net sales in the first half year investigated byEnergyTrend, a research division of TrendForce, first-tier Chinese manufacutrers have obviously lowered the proportion of shipments to Europe and will shift the focus to Chinese domestic market, Japan, and other Asian markets
Take Trina for example, the proportion of shipments to Europe is estimated to drop from 48% (last year) to 27%, among which, most of the shipments have been transferred to China and Japan The ratio of shipments to China will increase from 13% to about 30% Jinko’s shipments to Europe last year represented about 50% of the total shipments, however, it has been revised downward significantly Shipments to China are likely to represent 40%-50% of the total shipments in the 2H13 Also, Jinko is likely to increase the amount of shipments to Japan and USA In addition, the increased domestic market demand raised module shipments in the second quarter by more than 60% for Trina and Jinko Besides, JA Solar’s shipments to Asia accounted for 70% and Canadian Solar’s shipments to Japan accounted for more than 30% Although SunPower and REC are Western manufacturers, they reduced the shipments to Europe and focused more toward Japan It not only shows that demand from the Japanese market is increasing, but also shows the decline of the European market This will cause Western companies which were not affected by the anti-dumping and countervailing policies to re-adjust their strategic plans as well
Shifted focus back to the Chinese market, Chinese PV manufacturers increase net sales through domestic demand
Judging from the net sales in the 2Q13, Jinko and Trina have continued to raise shipments to China, which have also increased quarterly net sales by more than 50% Jinko has even become the first first-tier Chinese manufacturer that successfully turned around losses Having the largest amount of shipments, Yingli has reduced the ratio of shipments to Europe and transferred the shipments to Asia and USA while net sales remain the top among Chinese manufacturers As for Canadian Solar and ReneSola, although drop in net sales from the European market has not been as large as that for the previous manufacturers mentioned, they have transferred most of the shipments to Americas to support sales performance in the second quarter Even though JA Solar’s shipments to Asia (such as Japan) remain high, the company’s performance wasn’t outstanding since they put more emphasis on cell shipment rather than module shipment like the rest of the manufacturers
On the other hand, net sales for US manufacutrers are declining For example, First Solar has lost its championship in net sales; Shipments to Japan turned out to be better than expected for SunPower because high-efficiency modules can meet Japanese market demand, thus drop in net sales wasn’t as large as that for First Solar It shows that Western manufacturers that mainly focus on power plant projects basically didn’t have any advantages during the rising of the Asian markets Future development is yet to be observed
The Chinese government shows its confidence to restructure by coming up with many policies
EnergyTrend indicates that during EU-China trade wars, the Chinese government has aggressively come up with many policies in July and August to support PV development and has been trying to stimulate Chinese market demand to digest excess production capacity Overall, the amount of solar system installations (6GW, 10GW, and 12GW) may be completed in different phrases starting from 2013 to 2015 They are hoping to achieve the target amount of 35GW before 2015 Furthermore, the Chinese government has announced the FiT for grid-connected power plants and the subsidy standard of RMB042/kWh for PV distributed generation By restraining PV capacity to be expanded meaninglessly, it shows that the Chinese government has put more efforts in revising PV industry structure EnergyTrend believes that PV market in the fourth quarter will be dominated by China, Japan, and USA With China being the most potential market, changes within the Chinese market is likely to impact the future development of many Chinese PV manufacturers, thus affect the global PV industry development
Two major focuses in 2014 is that the quota allocation of Chinese manufacturers’ shipments to Europe will be announced and that large-scale power plant projects are important profit source for manufacturers EnergyTrend is going to hold its first PVforum 2013 – Market Status and Future Development for Solar Power Plants in Asia A thorough analysis will be presented based on the following topics – technology threshold, system security and maintenance, prospect of power plants, energy-storage system applications, and development of future Asian markets, and so on We sincerely welcome all of you to come join us If you would like to know more details, please click the following link: http://seminarenergytrendcom/PVforum/2013/TW/agenda/
