China-based makers lower prices for solar cells to US$0.95/W

Nuying Huang, Taipei; Jackie Chang, DIGITIMES [Tuesday 26 April 2011]

A few second-tier China-based makers of polycrystalline silicon solar cells have reduced quotes to US$0.95/W, the lowest ever on record, according to industry sources in Taiwan.

The inventory build-up in the Europe market and the delay of Italy's new incentive program are forcing solar players to decrease quotations in hope to stimulate demand. Some second- and third-tier manufacturers reportedly have halted operations to accommodate weak demand, while a few second-tier China-based solar cell manufacturers have reduced quotes to just under US$1.00/W.

According to industry sources, 6-inch polysilicon wafers cost US$3.00-3.30 per unit in China, which means this low spot price of US$0.95/W for solar cells is likely to equal the "break-even price" of many cell makers. It is widely known that China-based firms have cost advantage with lower equipment, facility and land costs, but the price crunch still leaves little room to breathe. The downward trend of the quotes in China is also causing pressure to the quotes in other regions which have reached historical lows as well.

Whether the record-low price offered by China makers can stimulate market demand will depend on the anticipated announcement of Italy's new incentive program this week.

The decrease in price along the solar supply chain is also an indication of the decrease in costs in the downstream side such as the systems. Media reports have noted that Italy's new incentive program will be announced this week, which means the capital will be available once the financial institutions figure out the rate of returns. The abundant capital and low price should be able to stimulate the halted demand.

But industry observers noted that although prices have continued hitting historical lows, demand has hardly picked up. In March the spot price for cells was between US$1.22-1.25/W. It has further decreased approximately 10% in April. The most affected by the price slash are the capacity-expanding cell makers.

The amount of backlog in Europe, which has so far hampered demand, will be the market focus after the announcement of Italy's new incentive program.

The backlog of inventory in Europe has been an indication of market demand. But it is difficult for firms to effectively control the actual inventory. Although many manufacturers have indicated the loosening of the build-up, rumor has it that there are China-based integrated solar companies looking to build warehouses at European ports to lower storage costs for the stockpile of modules.

China-based integrated solar companies include Suntech Power, Yingli, Canadian Solar, Trina Solar, JA Solar, and Hareonsolar.

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