We at Greenworldinvestor, have kept saying that the increase in upstream solar material prices is inevitable as capacity has stopped increasing, while demand keeps growing. Solar wafer prices have inched in the last few months, as solar cell and module prices have showed signs of stability. Polysilicon makers have rationalized their production as massive overcapacity drove all poly companies into losses. Some of the companies such as MEMC closed down their older plants, while Tier 2 makers have shut down their plants completely. Wafer prices are also increasing as wafer capacity expansion has almost completely stopped, with all wafer makers showing negative net margins.

Now the trend is changing with wafer price increasing, pressurizing the downstream cell and module players to increase their prices as well. Cell makers have already increased their prices by around 10% in the last 6 months and Taiwanese makers are expected to further increase it by another 10% in the next 3-4 months. Note pure play one part of the supply chain focused companies, have almost completely vanished except in the polysilicon segment. Also all major solar companies have shifted into system installation and development, given the huge potential for making profits in this area. Some of the earliest entrants such as First Solar (FSLR), SunEdison (SUNE) and Sunpower (SPWR) are making most of the profits from this area. Now the Chinese giants are also shifting their focus given the $20 billion a year opportunity, in their domestic market itself. With demand for solar energy continuing to grow at a robust pace, expect higher sustainable prices for upstream segment to persist for a long time.