As PV Capacity Clearance Intensifies, Will The Turning Point Of Component Prices Be Coming Soon?
source: pv-news
As expected, the photovoltaic industry is in mourning again.
The industry chain is almost completely in the red, but it is within expectations
On July 9, many companies released their performance forecasts one after another. It can be seen that from silicon materials to silicon wafers, from cells to modules, the entire industry chain is almost in the red. However, then again, the poor performance of the photovoltaic industry chain is also within expectations.
The reason for the performance loss is mainly attributed to the decline in product prices under the background of overcapacity and imbalance between supply and demand.
According to InfoLink data, in 2023, the price of silicon materials will drop by about 70%, the price of silicon wafers and cells will drop by about 60%, and the price of modules will drop by about 50%. Entering 2024, this situation has not improved. According to data from the Silicon Industry Branch, in the first half of this year, the price of silicon materials and silicon wafers has fallen by almost 40%.
According to a research report by Guojin Securities, as of June 26, the prices of P-type dense materials/N-type rod-shaped silicon/N-type granular silicon fell to 34,600/40,000/36,500 yuan/ton, respectively, which has continued to fall below the cash cost of enterprises.
In other words, judging from the price trend of silicon materials, the operating conditions of photovoltaic industry chain enterprises can be predicted.
In fact, the capital market has also responded in advance.
As of the end of June 2024, the photovoltaic industry index fell to 2034.41 points, a year-on-year decline of 25%, a new low in the past three years. So the question is, where is the "photovoltaic bottom" and when will the price inflection point come?
Supply-side reform is happening, and the price inflection point will come soon
According to data from the Energy Bureau, in May this year, the country's new photovoltaic installed capacity was 19GW, a year-on-year increase of 48% and a month-on-month increase of 32%; in the first five months of this year, the country's new photovoltaic installed capacity was 79.15GW, a year-on-year increase of 29%. At the same time, photovoltaic export data also maintained a high growth rate. In the first four months of this year, the year-on-year growth of component exports remained above 20%.
The capital market has always been worried that photovoltaic companies will lose overseas markets due to geopolitical influences. However, judging from the situation in recent months, this worry seems to be unnecessary.
It is true that the intention of European and American countries to restrict my country's photovoltaic products is very obvious. However, as long as the advantages of Chinese photovoltaic companies remain unlimited, the local production capacity in Europe and the United States is still insufficient, and the trend of photovoltaics as the main tool for energy conservation and emission reduction remains unchanged, then there is no way to fundamentally stop Chinese photovoltaic companies.
According to market forecasts, the global new photovoltaic installed capacity will still reach 450GW in 2024, an increase of about 20% year-on-year; according to the goals of the Paris Climate Agreement, the global cumulative installed capacity will need to exceed 5,400GW in 2030, and there is still huge room for expansion.
In a word, whether it is the domestic or overseas market, there is no problem with terminal demand, and the "quantity" remains stable and rising!
The core issue is still supply, that is, "price".
In June this year, the National Energy Administration issued a message to reasonably guide the construction and release of upstream photovoltaic production capacity to avoid repeated construction of low-end production capacity. From the current policy perspective, establishing a unified national market and regulating the investment promotion behavior of local governments are the next focus of the government. At the same time, the Ministry of Industry and Information Technology issued a draft for comments on the management specifications and measures for the photovoltaic manufacturing industry on July 9, which clarified the regulations on the process technology, resource utilization and energy consumption of photovoltaic manufacturing, and the requirements are more stringent than the 2021 version. The low threshold and vicious competition pattern in the future is expected to undergo fundamental changes.
However, compared with policy guidance, market factors are also the key to clearing capacity.
Zhongyuan Securities explained it this way in its research report:
"Integrated manufacturers generally shut down some production lines and reduce the operating rate. It is expected that the load reduction of enterprises will continue in the second half of 2024, and third- and fourth-tier manufacturers with weaker capital strength will be eliminated first."
Guojin Securities also expressed a similar view:
"The current silicon material price has fallen below the cash cost of the entire industry. It is expected that the silicon material link will soon usher in the process of accelerated shutdown, monthly supply and demand balance, mid- and downstream inventory replenishment, and price bottoming out.
In a word, the price inflection point will soon come.
Tongwei's conspiracy: production capacity must be cleared
As mentioned earlier, the terminal demand for photovoltaics is still growing. In the medium and long term, as long as the trend of photovoltaics as the main tool for energy conservation and emission reduction remains unchanged, photovoltaics will still be a growth industry.
Therefore, For enterprises, it depends on who can survive this round of trough.
Judging from the current situation, the situation in other links may not be easy to say, but at the silicon material level, Tongwei Co., Ltd. still has a great chance of winning.
In 2023, Tongwei Co., Ltd.'s high-purity crystalline silicon sales will be 387,000 tons, and its global market share will exceed 25%, ranking first for many consecutive years. According to the plan, by the end of 2024, Tongwei's silicon material production capacity will reach 850,000 tons, and will be further increased to 1 million tons by 2026.
In 2023, the average production cost of Tongwei Co., Ltd.'s high-purity silicon products has dropped to 42,000 yuan/ton, and its cost is expected to continue to decrease in the future as new production capacity is put into production.
Therefore, Tongwei Co., Ltd.'s conspiracy is: to expand production against the trend, and wait until this round of photovoltaic lows, relying on production capacity and cost advantages , further increase market share and consolidate the company's leading position.
Of course, the key to success lies in the company's technical and financial strength.
Let's talk about technical strength first.
As we all know, N-type batteries are subdivided into three major technical routes: TOPCon, heterojunction HJT and XBC. Although TOPCon is widely regarded as the mainstream solution of the new generation, its competition with HJT is not over. In addition, in the long run, the new thin-film battery solution with perovskite as the core has also attracted much attention from the market.
Note that Tongwei Co., Ltd. chose to develop the above multiple technical routes in parallel. In addition to TOPCon, Tongwei has explored and achieved results in technical fields such as HJT, THL, XBC, and perovskite.
On May 29, Tongwei Co., Ltd. Photovoltaic Technology Center announced Cloth, certified by the authoritative organization Nand, in the standard size of 2384*1303, the maximum output power of Tongwei's self-developed THC210 module reached 765.18 watts, and the photoelectric conversion efficiency reached 24.63%, once again breaking the THC module power record. In the field of forward-looking technology, the perovskite stacked battery laboratory established by Tongwei has achieved an efficiency of 31.68% based on the two-step perovskite/silicon stacked battery with large velvet, which is at the leading level in the industry.
Let's talk about financial strength.
On June 12, the Silicon Industry Branch issued a document stating that there are currently 19 domestic polysilicon production companies, 15 of which have begun maintenance and shutdown, and the production schedule in June has dropped by more than 30,000 tons month-on-month.
Obviously, many companies are a bit overwhelmed.
However, Tongwei still has more food in hand.
From 2021 to 2023, Tongwei Co., Ltd. will make a total profit of US$6.636 billion, far ahead of domestic photovoltaic companies. In other words, the company can fully use the accumulated profits to make up for the losses during the industry downturn. As of the end of March 2024, Tongwei shares had a book fund of approximately US$4.858 billion, which can cover the capital expenditure for the whole year. In addition, the company's debt-to-asset ratio is less than 60%. If the impact of bills and convertible bonds is excluded, this number is actually lower.
In a word, Tongwei believes that production capacity must be cleared, and the photovoltaic industry must be "the last one standing", and it, relying on cost, technology and financial advantages, must be the last one left.
Summary
Many people may say that Tongwei shares are gambling, but in fact, it is not.
In the long run, photovoltaics will go through a cycle almost every 5 years or so. As a veteran who has experienced 20 years of baptism, Tongwei can be said to be well versed in the development laws of photovoltaics and sees every step accurately.
Photovoltaic is a typical cyclical growth industry. As long as the industry has development prospects, excess capacity will eventually disappear. The supply side will be superimposed with technological innovation itself to promote the elimination of backward production capacity, and then realize the industrial chain to a higher stage.
As far as the photovoltaic industry is concerned, being too optimistic or too pessimistic is a mistake. For long-termists, the so-called cycle is nothing more than fighting monsters and upgrading. For Tongwei Co., Ltd., every time it survives a cycle, the company's market share and profitability will reach a new level.