Wen Bugu

To the surprise of many people, since the beginning of this year, the price of silicon wafer has been rising, and the prosperity of photovoltaic industry has heated up. The expected photovoltaic price war has not come.

On November 30 last year, Longji lowered the official quotation of silicon wafer by 7.16% - 9.75% for the first time. Two days later, Zhonghuan followed up, and the price reduction was greater than Longji. The world’s largest and second-largest silicon wafer manufacturers have launched the first shot of photovoltaic price reduction, which is considered by many people in the industry as the beginning of a new round of photovoltaic price war.

At that time, many analysts believed that behind the price reduction was the “Yang Mou” of Longji, the industry leader, that is, by reducing the profit margin of silicon wafer links, sniping at the admission speed of new silicon wafer players such as CNC and Beijing Express.

But now this “conspiracy” has failed.

As of March 2, Longji has raised the quotation of silicon wafers three times this year, and the price of 182 silicon wafers has increased by more than 11%. The price of upstream silicon materials also rose for seven consecutive weeks.

Previously, many investors were worried that the silicon wafer field would be involved in the price war and the photovoltaic industry would “change”. With the strong demand for silicon chips, this concern is temporarily eliminated. The stock prices of Longji and central silicon giants also hit the bottom and rebounded, and everything seemed to return to the state of “calm”.

So how should we view the fundamentals of the photovoltaic industry and the fluctuation of the industrial chain in 2022?

Judging from the fact that the off-season of photovoltaic installation is not light at the beginning of the year and the high annual installed capacity target, the fundamentals of the photovoltaic industry are generally good this year. But there is also the biggest risk - the price of silicon material may return to a high level, and there will be another mismatch between supply and demand.

In the longer term, the current calm state will not last long. Under the background of overcapacity in silicon wafers, batteries, modules and other links, the photovoltaic price war “will come later”. The time node of the price war will depend on the supply and demand turning point of the upstream silicon material, which will be the beginning of a new round of industry reshuffle.

01 Price War didn’t start

Each terminal power station is still willing to pay for high-priced photovoltaic modules, so it can be smoothly transmitted to silicon wafer and silicon material.

At the end of last year, Longji and central lowered the quotation of silicon wafers, which was once considered to be a key turning point in the photovoltaic industry, so it has attracted extensive attention. Statements such as “the opening of the all-round price war” and “changes in the industry” also appeared in media reports.

Why did the prices of silicon wafers and silicon materials fall and rise again in just two months?

The price adjustment of silicon wafer enterprises needs to be combined with the upstream and downstream game situation and downstream acceptance. Last year, the price of silicon wafer fell, there are two important factors.

First, the price reduction of silicon materials. Both Longji and Zhonghuan have told the media that “loose silicon price” and “Silicon entering the downward channel” are one of the main reasons for the price reduction. Compared with silicon material, the decline, stop and rebound of silicon wafer should be earlier.

Second, it is related to downstream demand. Similarly, both companies have told the media that they are considering stimulating downstream demand. In this regard, LV Jinbiao, deputy director of the expert committee of the silicon industry association, also pointed out that the price reduction was mainly affected by the (expected) off-season of installation in January this year. Coupled with the inventory clearing at the end of the year, the component price was fine tuned, and the price reduction was further transmitted to the battery and silicon chip end.

However, these two important factors have changed since the new year.

In terms of silicon material price, in the pessimistic expectation of the market, silicon material stopped falling in early January 2022 and began to rebound on January 26, rebounding from 230 yuan / kg to 246.2 yuan / kg, rising for seven consecutive weeks. Silicon wafer prices also rebounded.

In terms of market demand, the callback of industrial chain price at the end of last year stimulated downstream demand, resulting in not light off-season. The silicon branch pointed out in its recent report that “downstream silicon wafer enterprises still maintain relatively high load operation during the Spring Festival”. Central also responded to the media that “the downstream operating rate is high, the upstream supply is short, and the prices of silicon materials and silicon wafers keep rising at the same time.”

In the final analysis, due to the strong demand in the downstream, some terminal power stations are still willing to pay for high-priced components, which can be transmitted to the links of silicon wafer and silicon material to drive the price rise.

According to the centralized procurement of photovoltaic modules by central state-owned enterprises in 2022 (as of February 20), in 2022, the bid winning price of photovoltaic modules generally exceeded 1.8 yuan / watt, and even some bid winning projects exceeded 1.9 yuan / watt, close to 2 yuan / watt.

It is estimated that the photovoltaic module price of 1.8-1.9 yuan / watt can only support about 6-8% of the return on investment at the downstream power station. However, even if the income is not high, under the promotion of the national industrial policy, the central state-owned enterprises have to bite the bullet, which has a certain demand rigidity behind it.

According to insiders, the total scale of photovoltaic power station projects that received indicators (road strips) but have not been constructed in the whole year of last year and January of this year has reached more than 250gw. However, due to the high price of components affecting the income of the power station, these demands have not been fully released and have been postponed to this year. Last year, the newly installed capacity of photovoltaic in China was only 52.97gw, which did not meet previous expectations.

02 supply and demand mismatch

In 2022, there is the biggest risk - the holding of silicon as the king continues to be staged, and the supply and demand are mismatched in stages again.

Judging from the slow off-season of photovoltaic installation and the total scale of a large number of photovoltaic power station projects to be built this year, the domestic downstream photovoltaic installation demand is very strong this year.

Wang Bohua, President of China photovoltaic Association (CPIA), predicted that China’s increased solar power generation capacity this year will reach 75-90gw, an increase of 37-64% year-on-year, Bloomberg reported. He said that with the government stepping up the implementation of renewable energy policies, large-scale solar power generation facilities in the western desert are being built, and the solar power generation market for roof installation also shows a strong growth momentum.

Favorable factors at the international level are also pouring in. Under the conflict between Russia and Ukraine, the transformation of western developed countries to clean energy is more urgent. For example, the German Ministry of economy proposed a draft on February 28, which plans to accelerate the expansion of wind and solar energy and achieve the goal of 100% renewable energy power supply 15 years ahead of schedule (to 2035). In addition, the gradual decline of international logistics prices is also conducive to the export of photovoltaic modules.

Therefore, the overall positive trend of the fundamentals of the photovoltaic industry in 2022 is certain, but there is also one of the biggest risks - holding silicon as the king continues to perform, and the supply and demand are mismatched in stages again.

Last year, many institutions and experts expected that with