HomeRegional NewsAfricaAnalysis: Material shortage to increase solar module prices in 2021

Analysis: Material shortage to increase solar module prices in 2021

Current market trends are resulting in module makers not being able to bear the cost pressure anymore, which is transmitted from the upstream sector as material shortages continue to ascend.

Price increases are reflected in the actions of almost all industry giants like JinkoSolar, Longi, and JA Solar, which reversed their price cut policy and raise their bid quotation, others have already notified their customers of the price hike.

The reason behind this is that quotations of polysilicon have continuously risen since March, with the procurement of the product becoming difficult. The recent polysilicon price announced by local major suppliers has increased another 10% compared to Q4 2020 despite their foundaries (fabs) running at 100% capacity.

In overseas markets, the prevention and control of the pandemic have decelerated the speed of logistics for imported polysilicon, as well as extended the duration of clearance, and coupling with the unresolved issues regarding the unmitigated shortages in shipping containers and the rise in cost, the overseas quotations for polysilicon will continue to rise.

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Attributable to the polysilicon insufficiency, the observational period will last longer than expected, the volume of concluded transactions across the entire supply chain remained insignificant and the transmission to module sector has already been clear.

As a result, module prices have increased overall, and continuous inflation is seen in mainstream mono-Si products due to cost pressure. The highest price offered in the Chinese market is up to 1.78 RMB/watt ($0.27/watt), followed by a substantial adjustment appeared in the module market.

Solar module prices impact on market downstream and upstream

Tier module makers have commented on the significant increase in the cost of auxiliary materials in addition to the apparent rise in cells, and are forced to upward adjust on module quotations due to cost pressure, while the end purchasers are now even more conservative by taking into account the emergency of orders.

An observation on the current status of the tender market of modules indicates that the bargaining period between businesses and the downstream and upstream sectors is carrying on amidst the elevating costs.

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A number of domestic projects are becoming rigorous on the requirements for module makers regarding clear definitions on the delivery schedule and the highest quotations, where partial projects are even stipulating regulations on the current and dimension of modules.

Pertaining to overseas markets, the previously postponed and new demand continues to release, though the upstream inflation has resulted in an increase in the tender prices of several market projects, which extends the project schedule. The turbulence of the solar PV supply chain will last at least three months or longer till supply and demand will further improve and rebalance again.

Jinko Solarhttp://www.jinkosolar.com%20
JinkoSolar (NYSE: JKS) is one of the largest and most innovative solar module manufacturers in the world. JinkoSolar distributes its solar products and sells its solutions and services to a diversified international utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions. JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of 10.5 GW for silicon wafers, 7.0 GW for solar cells, and 11.0 GW for solar modules, as of March 31, 2019.

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