Solar module manufacturers are not the only ones feeling the heat of price pressures due to high polysilicon prices that have gone as high as RMB 220 per kg in very recent times. It has also started to impact inventory of solar products that’s increasing in high double-digit numbers.
Sharing PVInsights statistics, Aiko Solar’s presentation during SNEC 2021 showed that in the months of April 2021 and May 2021, PV products worth of a total of 26.2 GW were piled up in the warehouses in China, the breakdown for which is as follows:  5.1 GW of polysilicon, 5.8 GW of wafer, 1.2 GW of cell, and 14.1 GW of modules. This 26.2 GW is 61.8% higher than what ended up in the warehouses during Q1/2021.
At the end of May 2021, total cumulative inventory for the entire supply chain in the Chinese warehouses was a total of 68.6 GW, as shown by Aiko.
This means manufacturers are biding their time to even assemble their products for final shipments as they wait for high polysilicon prices to come down before demand can pick up again. Price pressure trickles down from polysilicon to modules which eventually pushes up module prices, impacting overall project costs.
If such high capacity continues to stay in the warehouses and grows further, it would not only impact the utilization rates of the fabs across the process chain, it might even slow down the pace of the expansion plans of leading manufacturers.
Meanwhile, while sharing recent wafer price rise on June 2, 2021, PV InfoLink commented, “Demand was markedly affected after these price increases. Amid waning end user demand, cell manufacturers and vertically integrated companies trimmed down utilization rates further, resulting in lower acceptability for the wafer price hike and smaller trading volumes.”
On the silicon production side, 11 Chinese polysilicon manufacturers maintained a ‘high operating rate’ in May 2021 to respond to ‘excess demand’. However, production output of 3 companies is restricted leading to a marginal MoM decrease in domestic production of polysilicon mainly due to ‘overhaul on production lines for Xinjiang businesses and the reduced production load for Inner Mongolia businesses under the energy consumption policy’, according to an observation of Energy Trend that sees no respite in the near future.
“Looking into the subsequent market, major polysilicon businesses have tightened on the delivery of long-term orders, though the overhaul of production from 3 producers in June will continue to affect the supply of the product, and the support in inflation provided by the upstream and downstream sectors may further aggravate the tight provision of polysilicon in the country,” stated Energy Trend analysts.
Meanwhile, new polysilicon production capacity plans announced by several manufacturers is set to come online within a year or 2 which should not only ease the supply situation (see Xinte Energy To Build 200,000 Tons Polysilicon Fab / see Tongwei To Expand Polysilicon Production By 40,000 MT); it’s also expected to result in lower prices again. The question though is when that’s exactly to happen – and if a new oversupply situation might result in a real price collapse.