Abstract When Tongwei Solar announced on August 10 that it would raise the price of monocrystalline cells again, the sentence "Living for a long time" became a common comment in the industry on the recent price increase in the photovoltaic industry chain. The price increase of the photovoltaic industry chain that began in July this year has a tendency to "intensify" and...
When Tongwei Solar announced on August 10 that it would raise the price of monocrystalline cells again, the phrase "Living for a long time" became a common comment by industry insiders on the recent price increase in the photovoltaic industry chain.
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This wave of price increases in the photovoltaic industry chain that began in July this year has a tendency to "intensify" and triggered a strong reaction from the end market. Some photovoltaic distributors told reporters that the sudden price increase has "disordered" the component spot market, and many photovoltaic projects have considered postponing or even suspending work.
The reporter learned that in this round of price increases, downstream end companies have become the "most injured" party: On the one hand, in the entire photovoltaic industry chain, the closer to the user link, the lower the profit margin, and the price increase pressure from upstream will be further reduced. The profit margin of the terminal market; on the other hand, the profit margin is squeezed, which will affect the enthusiasm of downstream power station investment and developers, and the overall enthusiasm of the terminal market will cool down, eventually "backlashing" the entire photovoltaic industry chain.
"This price increase will cause unbearable burdens for downstream companies." Qian Jing, vice president of JinkoSolar, said in an interview with a reporter from 21st Century Business Herald that to deal with short-term price increases caused by short-term supply and demand imbalances, upstream and downstream supply chains need to include The joint efforts of policy makers minimize the impact.
Component manufacturers "difficult to both ends"
“It’s a problem whether you can get the components or not, and the project can’t be done.” A person in charge of a photovoltaic power plant investment company told a reporter from 21st Century Business Herald. Under the raging price increase of the industry chain, “starting to lose money, not to start, etc. The pessimism of "death" appeared.
The reporter learned from several photovoltaic companies that this round of price increases has caused miserable component manufacturers at the end of the manufacturing process and end companies close to the user market.
An unnamed person from a certain domestic photovoltaic company said in an interview with a reporter from 21st Century Business Herald that there is a certain "chaotic phenomenon" in module quotations due to upstream price increases, especially some module OEMs have stopped Order, the contract cannot be performed normally.
The last round of sustained price increases in the domestic photovoltaic industry occurred at the end of the third quarter of 2016.
At that time, domestic polysilicon materials (first-level materials) hit a new stage low and ushered in a rebound, which subsequently led to a temporary rise in the prices of single and polysilicon wafers. But in 2018, due to the concentrated release of photovoltaic production capacity, the industrial chain ushered in a substantial price cut. Taking polysilicon materials as an example, as of the eve of the price increase in the industry chain, the price of domestic polysilicon materials (primary materials) has fallen by 66% in the past two years.
In the context of parity-based Internet access, the current round of price increases in the photovoltaic industry chain is indeed a bit "crazy".
As of August 7, the latest price excluding tax for domestic polysilicon materials (first grade materials) was about 88.23 yuan/kg, an increase of 51.67% from the price at the end of June. It is worth mentioning that this price is similar to the price levels in the fourth quarter of 2018 and the first quarter of 2019.
The price increase caused by the shift in the supply-demand relationship of the polysilicon material market will soon be transmitted to the silicon wafer and the cell end. Listed companies Longji and Tongwei have been on the cusp of rising prices for their products.
In late July, Longi raised the price of silicon wafers twice. The latest quotation was: P-type M6 monocrystalline silicon wafers with a thickness of 175μm (166/223mm) 3.03 yuan/piece, and P-type G1 monocrystalline silicon wafers with a thickness of 175μm (158.75/223mm) ) 2.9 yuan/piece, up 15.65% and 14.62% respectively from the quotation at the end of June.
Tongwei Solar has raised the price of mono-polycrystalline cells one after another. The latest quotations are: polycrystalline cells (diamond wire 157mm) 0.60 yuan/watt, monocrystalline PERC cells (single and double-sided 156.75mm) 0.95 yuan/watt, monocrystalline PERC The battery (single and double-sided 158.75mm) is 0.97 yuan/watt, and the mono-crystalline PERC battery (single- and double-sided 166mm) is 0.97 yuan/watt, up 20%, 21.79%, 21.25%, and 21.25% respectively from the price at the end of June.
At the same time, the prices of auxiliary materials such as photovoltaic glass, silver paste, packaging film, welding tape, aluminum frame, etc. have collectively "rised", which has further boosted the price increase in the industry chain. The price increase pressure has accumulated on component manufacturers.
"This price increase has a great impact on module manufacturers, and they have to use price increases to disperse the pressure." The aforementioned photovoltaic business person pointed out to the 21st Century Business Herald reporter that module manufacturers play a two-sided role in the price increase. It is necessary to directly face the pressure brought by the price increase of upstream silicon materials, silicon wafers, cells and auxiliary materials; furthermore, component manufacturers deal directly with the terminal market, and price increases are bound to be pressured by the terminal.
However, this round of price increases in the photovoltaic industry chain has also heated up the topic of "vertical integration" for photovoltaic companies.
"Component companies need to consider the future strategy from pursuing market share to appropriately increasing their vertical integration." Qian Jing said that this round of price increases has stuck the "neck" of component manufacturers and downstream companies.
What about the end market?
The recent pace of price increases in the photovoltaic industry chain is somewhat unexpected, which makes the voice of the industry chain gradually rise.
When raising the price of silicon wafers, Longi stressed in response that its passive price adjustments are not seeking short-term benefits. Wang Yingge, General Manager of LONGi Co., Ltd. said, “Faced with the all-round rise in the price of polysilicon and auxiliary materials in the short term, LONGi is willing to face it together with the industry chain, fully communicate, overcome challenges in coordination, and balance price and market development. Good industrial ecology."
“After the supply and demand pressures are balanced, prices will fall back to or even lower than the previous level.” Qian Jing also called on the upstream and downstream of the photovoltaic industry supply chain, including policy makers, to work together to cope with the short-term price increase phenomenon, and predicts that this year 10 From January to November, the price of the industry chain will return to a normal position.
A senior analyst in the new energy industry told the 21st Century Business Herald that in the first half of this year, most photovoltaic companies were affected to a certain extent by the epidemic and their performance declined. Photovoltaic companies located in the upstream of the manufacturing end have realized the increase in product volume and price through this round of price increases, and repairing profits is also a normal behavior to safeguard the company's own interests.
It further pointed out that in the current price increase, leading companies have not been found to have maliciously interfered with the market, and the price increase is a market behavior. Therefore, in this whole industry chain price increase, it seems unrealistic to rely on the upstream and downstream cooperation of the industry chain to negotiate price adjustments to spread the cost pressure.
Take Tongwei shares as an example. In the first half of this year, the company achieved operating income of 18.739 billion yuan, a year-on-year increase of 16.21%; net profit attributable to shareholders of listed companies was 1.010 billion yuan, a year-on-year decrease of 30.35%.
The epidemic led to a decline in demand in the photovoltaic industry in the first half of the year, and the prices of silicon materials and cells dropped significantly. The profitability of Tongwei's photovoltaic business was relatively under pressure, and the gross profit margin declined.
However, if the negative impact of short-term price increases is to be solved, the cooperation of multiple parties is inevitable.
Qian Jing made recommendations from four aspects: For downstream power station companies, if possible, postpone the project to next year; for the government, can the grid-connection period be moderately relaxed to give the industry a buffer period for downstream development companies Within the scope of the pressure-bearing capacity, the project can continue to be executed to avoid the impact of future investment enthusiasm; for component companies, especially the top first-line component manufacturers, consider future strategies from pursuing market share to appropriately increasing their degree of vertical integration. , To make future development more sustainable and independent; for professional design institutes, when project planning, specifications can be appropriately opened. Too rigid procurement standards can only allow downstream companies to bear the price increase caused by monopoly.
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